How to Use Short Term Loans Wisely

Short term loans are frequently in the press these days, and mostly for the wrong reasons. They have a poor reputation and are often seen as preying on the vulnerable and financially insecure sections of our society. And yet, when faced with a financial emergency, many people without savings or family to support them have no other recourse but to turn to these sorts of loans to help them out of a tight spot. But short-term loans can be a costly way of borrowing, especially if you’re not able to repay in full on the due date, so how can you avoid getting into a cycle of debt?

 

  1. The first and golden rule is not to borrow any more than is absolutely essential to cover your immediate needs. It may be tempting to ask for a little extra to give yourself a treat, but this is one of the main reasons why people end up with spiralling debts.

 

  1. Never, ever exceed what you can comfortably afford. This calls for carefully budgeting, so you will need to write down all your incomings and outgoings. Do it honestly and don’t forget to include all your incidental expenses like your morning coffee or newspaper which don’t necessarily show up on your bank statement.

 

  1. Unless you’re borrowing because you’ve just changed jobs or you’re expecting a bonus payment or some other windfall that will enable you to start with a clean slate, you need to see where you can make savings. Take the list you made of your income and expenditure and check off every single item. If it’s not essential, do without it. If it’s something you can’t avoid like your mortgage, insurance, utilities or existing loan repayments, shop around to make sure you’re getting the best possible deal.

 

  1. Make every possible effort to repay your loan in full on the due date. Even if it will leave you short, it may work out cheaper to do this and take out a fresh loan for a smaller amount than it would cost you to pay the additional late payment fees.

 

  1. Always read the small print. Any responsible loan company should make sure that you fully understand how much you will have to pay back, but ultimately it’s down to you to make sure you know what you’re committing yourself to.

 

Following these “rules” will stand you in good stead whether you’re considering a short-term loan or indeed any other form of credit. Debt of any sort can get out of hand at an alarming rate when it’s not managed properly, and no financial institution will be as accommodating as the bank of Mum and Dad! So only borrow when you’ve explored all of the alternatives available to you and make sure you keep a realistic balance between your income and your lifestyle if you want to stay out of trouble.

Be sure to view the short-term loans that we offer and contact us if you need any more information or advice.
 
 
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