I do not loan my friends money, because that is the fastest way to lose money and friends too. That is my policy, I do not know about yours, not that it matters because today, people hardly approach others for personal loans, reason being, we are all in the same financial rut, and we are looking for personal financial tips to get us out of the money rut.
When looking for knowledge of a loan online, you will find a lot of information. A loan is just that … money advanced to you to be repaid (by you of course, at a later date)
The Most Common Types Of Loans
Nowadays, many organizations have come up and they offer individual advances. These credits, which are commonly on the lower side, are unsecured and given out on mutual trust between the provider and the borrower. They are commonly called pay day loans and as the name suggests, they are pegged on your monthly pay. The borrower just obtains a required sum and after that pays it back on his or her next payday.
In the event that the credit sum is somehow substantial, that is, on the high side, a few loan providers will work out easier repayment options for the borrower. And here is the catch! The longer it takes to pay off a debt, the higher the interest charges that the borrower will accumulate.
It is best to not obtain this “longer” term loan unless it is totally essential, and make sure you repay the loan as agreed in the contract. In fact, whenever you borrow to repay later, make sure you pay, regardless of whom you borrowed from. Even if it is a pay day loan, please pay it back. And do not sign any contracts before collecting enough basic knowledge of a loan.
When To Borrow A Payday Loan And When To Abstain
Since interest rates for payday or individual credits are high, regardless of how rapidly you pay them back, you ought to abstain from taking out an individual advance just because you needed some money.
If you need to do something fun like taking an excursion, a payday advance is not the right decision for you. It is also not substantial source of money for purchasing a car or a house, so do not set your sights too high.
Simply put, always look at pay day loans as a means to meet emergency needs or to survive a crisis circumstance or to get by until that next paycheck makes it through. If your car breaks down while payday is weeks away, you definitely need to get it back up so that you can drop and collect children from school.
Basic Knowledge Of A Loan
It is important for you to abstain from applying for numerous loans from different providers at the same time. Finance guides will tell you that:
- You should never borrow money to pay another debt
- You should never borrow money that you do not need
- You should never borrow more when you already hold another loan.
Never settle for the first lender that you find online or offline. You should shop around and compare charges and other features before you settle on the best one, and look for fine print! Fine print in this case means things like penalties for late payments, and the terms and conditions.
Pay day loan providers mostly share information from the same database. Thus, when you apply for their cash advance online, they will look you up and if you have defaulted on an earlier credit with another lender, they will deny your request or lend you the money alright, but at a very high rate and stricter terms. Thus, do not hop from one lender to another.
While paying your mortgage and car loans on time will enhance your credit score, paying the payday advance will not. Chances are you got the loan on bad credit, but that does not mean that it is not important.
While it may not have a positive effect on your credit score, defaulting on the payments of the same will have a serious effect on your credibility as you have seen here. Thus, always be committed to stick to the terms of payment and your side of the bargain. From the advice that you will find even in the general financial information, your debts never go away, until they are repaid.
You will be required to give your identifiable information when applying for the cash advance. This is information regarding where you live, your name, address, checking account and your occupation. Always tell the truth to expedite the process.
And now we come to the last most important requirement … your checking account should be healthy, that is, there should be no pending overdrafts. If your account reads negative, no pay day loan lender will want to lend you money.
Remember what we said at the beginning of this post… that you should never borrow a pay day loan to pay another one? Have your house in order. Read personal financial tips and even go for financial counseling so that you know how to stay on solid footing, financially.