Top tips when taking out a Short Term Loan
If you need some extra money then you might consider whether you should take out a small short term loan. These are something that many people do use, but they often get a lot of negative press. This means that it can be difficult to decide, whether you really should take one out or not. You may be concerned about the fact that many people are against them, but really need some spare money.
The problem that most people have with this type of loan is the cost. They can be expensive compared with some other types of borrowing. If they are paid back on time, then the price is not too high, but it is when you do not manage to pay it back that things can get difficult. In this scenario the costs will escalate as interest and charges can soon pile up and you can find that the debt gets really big. There are regulations in most countries now to stop them getting really huge, but they can still make the debt really difficult to manage. This is why it is important to only borrow using this type of loan if you are completely confident that you will be able to repay it.
It can be wise to think hard before signing up to a loan like this. Not only to consider whether it will be something that you will manage to repay, but also to think about whether you really need the money and if you can borrow it elsewhere. A loan should normally just be taken out in an emergency because the cost of paying it back is so high, with a few exceptions such as a mortgage. If you do really need the money, then there could be several borrowing options for you. It could be cheaper for you to use an overdraft or credit card, if you have these available to you, but do check the costs and terms and make sure that you repay them as soon as possible as they can be dearer than a short term loan in some circumstances. It may even be better to consider asking friends and family to help you out – they may be more than happy to lend you money and give you much better repayment terms than other lenders.
It is wise to consider how you will manage the repayment. A short term loan normally requires the repayment to be made on your pay day. This means that the money gets taken from your account on the day that you are paid. You might be very confident that the money will be there on that day, but you need to think about how you will manage for the rest of the month when you have had this big lump sum taken out at the start. You do not want to be in the position where you need to borrow again the following month. Therefore think of ways that you could cut back your spending and earn more money so that you are able to more easily manage financially.
