Like any other major decision making, applying a loan also requires a lot to cogitate. Weighing the pros and cons before applying a loan will prevent us from being buried in debt for the rest of our lives, and we know the heavy feeling of carrying the burden of debt.
Questions to ponder are: How much will it cost me? Am I capable of paying the loanable amount? Is it a good or bad debt? Is it a need or a want? These are just some important points to consider when applying a loan.
HOW MUCH WILL IT COST ME?
It wouldn’t hurt if we start calculating the estimated amount of how much the loan will cost us in the end. On the one hand, unsecured loans such as Cash advances or Payday Loan will cost us more since it has higher interest compared to other loans. On the other hand, it is preferable during emergency cases since it does not require collateral for loan and or other long application procedures.
AM I CAPABLE OF PAYING THE LOANABLE AMOUNT?
Always consider your capacity to pay your debt. Never loan an amount that you are not capable of paying especially when the loan has high interest rates. Fervently set limits on how much to borrow and set the boundaries of spending within your means.
IS IT A GOOD OR BAD DEBT?
A debt is considered good when we use a loan for business or make the money productive. It is considered bad when we apply a loan to pay for another debt and further lead us to more debt.
IS IT A NEED OR A WANT?
Making an impulsive decision will not be of help when applying a loan. We need to make sure that when we apply for a loan we know where the money is going. Setting a ‘loan goal’ will help ensure whether we really need to loan or we are just driven by our want to have instant cash or property. Without a ‘loan goal’ your loaned assets will later become a liability.
Getting a new loan is a great experience because it will give you the leeway to buy the things you want. However, in this fit of joy, you might forget the important things and you’ll end up wasting money on stuff that you don’t need. As much as possible, you shouldn’t use a loan to buy things. But if it cannot be avoided, you should focus on things that can help you improve your life.
Below are three useful suggestions:
You may be puzzled why an organizer is included in the list. Well, the organizer is the best tool that you can have for planning your life journey. No, that latest smartphone app won’t work. It’ll just bring a ton of distractions that can totally work against you. If you can plan using an organizer, you’ll be more focused. Ideas will flow naturally on the pages, and you can see the areas of your life brightening. Organizers don’t cost much, and you can freely customize the style that you want.
If your goal is to raise your income level someday, you need to find additional projects to work on. Your job is not enough to sustain a financially-free life. You need other nest eggs and income sources to become successful. In this case, a low-budget laptop or desktop computer can be a valuable purchase. This gadget will help you secure freelance projects and raise your income by a large margin. Just remember to be patient in hunting for freelance projects. Competition is tough and you need to outline your skills greatly.
Hobby Craft Materials
Are you a crafty person? Do you have a creative skill that you think can help you gain profits? In that case, you should focus on buying the necessary materials for your craft. If you fancy making t-shirts, use your loan to buy fabric, paint, and equipment. The same manner applies with virtually other creative skills. Once you hit it big in the market, you can recoup your initial investment within few weeks or months.
While you have the freedom to purchase anything you want after getting your loan, you need to make decent choices. Don’t pick overly expensive items! Remember that uncontrolled spending will pull you down quickly. If you really need to purchase things, make sure that they’d contribute to your income or self-development. Most importantly, never forget your responsibility as a loan borrower!
We are all faced with uncertainties, especially with regards to financial stability. Unexpected needs will just surprise you out of nowhere without being prepared for it. That is why many financial institutions are offering a solution. One of these solutions is applying for a payday loan. This is done by, the borrower, issuing a post-dated check and cash it out on the next payday or the date agreed upon usually not exceeding 30 days. In addition, the borrower would also give an additional fee in exchange for cash.
The thought of instant access to quick cash sounds very appealing especially when you’re faced with unexpected bills that you urgently need to pay off and have no emergency savings in stored. With payday loan, borrowers can access to fast transaction loans without the hassle of long procedures such as securing papers for collateral. Basically, it only takes a range of few hours to few days to get the loan approved. If an emergency situation arises and acquiring fast cash is a must, this solution is for you.
However, payday loans have higher interest rates since it is an unsecured loan which does not require any collateral from the borrower. Typically, borrowers who go for payday loans are those who have the urgent need for fast cash, not minding the interest rate of the loan due to emergencies. This in turn will make their problems double since most payday loans have higher interests compared to other loans with collateral. And even if the interest rate of payday loans sounds reasonable, may range from 15% to 30% interest rate, but due to the short span of given credit time it is actually much higher than a credit card charge for the same amount. When payday comes, and you failed to pay off the original loan plus the fee, you can roll-over the loan for another fee. This can inflate expenses for the consumer. According to the Consumer Finance Protection Bureau, half of all borrowers end up paying more in fees than they originally borrowed.
Need immediate cash for dream travels, urgent pay-offs, tuition fees, home furnishings or remodeling and many other urgent cash needs before payday? Of course, urgent needs require urgent remedies right? But before plunging in into the enticing offers of applying for a payday loan, consider these truths first.
How It Works
Payday loans, also known as ‘cash advances’, are short term unsecured loans basically intended to be paid until payday or the date agreed upon usually not exceeding 30 days plus interest. This is done by, the borrower, issuing a post-dated check and cashes it out on the declared date. In addition, the borrower would also give an additional fee in exchange for cash. If the account runs short on funds to cover the check, the borrower usually faces a bounced check fee from their bank in addition to the costs of the loan. The loan gains additional fees and an increased interest rate as a consequence of the failure to pay.
Basically, all that is needed to apply for a Payday loan is an open bank account, a steady source of income, and identification. However, Payday loans can be very expensive and can cost you a lot. Since Payday loans are short term loans, even with seemingly fair interest rates, but due to the short span of given credit time it is actually much higher than a credit card charge for the same amount of debt.
Stressing the impact of stagnating wages, insecure work and rising prices nowadays, without enough financial knowledge, even employed people are enticed to apply for a loan just to make their cash last to the end of the month. Low-income families who were struggling to make ends meet added to the trend to rely on credit to buy essential items. However, if their pay is not enough to meet their everyday needs, how much more will they be able to pay for their cash advance? Consequently, many are failing to make ends meet and are falling into further debt. This will entrap them to the vicious cycle of poverty and debt.
Are you already familiar with loan sharks? These are individuals or institutions that lend you money and commit usury. They charge high amounts of interest for a loan even to the point of above legal rates.
You’re thinking, “Can I possibly be victimized by loan sharks?” Sad to say, the answer is “Yes!” When you would apply for a personal loan without setting your limits to spending within your means and not minding your loan goals, you will be in danger of being bitten by a loan shark. In addition to this, a possibility of being in debt with loan sharks become greater due to mishandling of assets and not minding life’s many uncertainties like sickness, death of a family member, loss of income or unemployment.
You would think, “No way! There a lot of legal institutions nowadays who offer lower interest rates, why would I take the risk of indebting myself to a loan shark?” People who apply for a loan, whether personal or business loan, without considering their capability of paying the loanable amount fall into this trap. Even if you start to borrow from legal money lenders with fair amount of interest rates but failed to consider your ability to pay your debt, later on once you fail, you would be forced to borrow from money lenders who would offer fast approval, no credit check and no other long procedures to avoid being penalized by your first lender. People who need urgent cash are usually the ones who fall for this bait. These are the people who had been turned down by conventional lenders due to delinquent accounts, missing loan payments and other financial worries.
Once you are unable to pay your debt to loan sharks, they will typically resort to violence-whether physical or psychological, since most loan sharks have no legal hold to recover debt. Other unethical practices are not new to them. Basically, they will pressure and threaten you and even force you to borrow from other money lenders just to pay your debt from them.