You’ve probably heard the old saying, “Neither a borrower nor a lender be.” While it would be great if we were all so financially stable that we never had to worry about borrowing or lending money, that just isn’t a reality for most people today. But if you do find yourself in a tough spot financially, even though you may not want to borrow money and try to avoid personal loan companies like the plague you may not have a choice. So if you have to make the best of a bad situation, you must be smart about the process, choose a reputable lender, and make your payments on time.
Choose Your Personal Loan with Care
When it comes to borrowing money, there are few things more important than who you borrow it from! Whether your loan experience is a positive one that helps you to save or a negative one that gets you into even more debt will depend heavily upon the lender that you choose. So, do your research and look for a lender that has been in business for several years, that does not have complaints filed with the Better Business Bureau, and that gets good reviews from past customers. Be wary of lenders that have charges masquerading as fees so the interest rate appears lower than it actually is. But most of all, look for a loan company that offers low interest rates and payment amounts that you can realistically pay on time.
Don’t Take a Personal Loan for More Than You Need!
When you get approved for a large amount of money, it can be tempting to take the full amount. After all, not doing so can feel like turning down “free money,” but remember, that money isn’t really free. You will have to pay it back plus interest in time. So, even if you end up getting approved to borrow more than you need, don’t do it. Have a clear idea of exactly how much you need to borrow and don’t waver from that amount. And, remember you can always take your business elsewhere. If you get approved at one location, that’s usually a fairly good indication that you will be approved by other lenders as well.
Personal Loans vs. Over Drafts
Most of us have been guilty of purposefully (or accidentially) over drafting our bank accounts a time or two. When money is tight and you don’t know what else to do, you might simply swipe that maxed out bank card or write that bad check without caring about the consequences. It is usually, however, in your best interest to take out a loan instead of ending up in an overdraft situation. Banks often charge $25-$35 for every purchase made that puts or keeps you in the negative, and that can add up quickly. For instance, if you overdraft only $25.00 that is like an instant 100% interest charge, so two bad checks for $25 each may end up costing you $70 in fees. Plus, the fee also tends to be charged for bad checks in addition to other fees that may be assessed. So, planning ahead and taking out and paying back a personal loan for $100 may be more affordable than the penalties on a couple of bad checks. Remember, knowingly writing a bad check is illegal in most states. A better choice than a short term “payday” loan however may be a low inerest credit card! Of course the rate you pay depends on your credit rating. Compare Credit Cards Here to see what rates you might qulaify for.
Getting Back on Track
One positive thing about personal loans is that, when you pay them on time, you begin to slowly rebuild your credit. For those who have less than perfect credit scores, this can be a real blessing. And, it can open the door to lower interest rates in the future. Prepaid Credit & Debit Cards and Instant Approval Credit Cards may have higher rates than other cards but also may be helpful in rebuilding your credit rating.
See Also:
- Payday Loans: Debt Trap or White Knight?
- Short Term Loan vs. Long Term Loan – Which One to Choose?
- Responsible Short Term Payday Loans for Christmas
- Bad Financial Advice Abounds
- Teaching Your Kids Money Management Skills
- How To Develop Winning Money Management Skills
From Amazon:
- The Total Money Makeover: A Proven Plan for Financial Fitness
- How to Manage Your Money When You Don’t Have Any
- The Money Book for the Young, Fabulous & Broke
- 90 Day Money Challenge: Boot Camp For Financial Fitness
Byline
This article was composed by Ty Whitworth for the team at anyhousewanted.co.uk; they can help answer the perennial question: how can I sell my house fast?
Image courtesy of Stuart Miles / FreeDigitalPhotos.net