Before you apply for a short term loan, make
sure you understand what you are getting yourself into for both the short term
and long term. Payday
short term loans are expensive and are only a means if you are in a
financial situation with serious problems. The interest to short term loans are
extremely high, and this is what will get you into trouble in the future when
you are paying back your loan. Below are just a few reasons why you should
avoid short
term loans if you can.
High
Interest
When you apply for a short term loan, you are
probably thinking of the immediate good of being able to use that money for
whatever need you have. Unfortunately, you are most likely not thinking about
how when you pay it back it will be around twice as high than what you
borrowed. Each company will have slightly different Representative
APRs. This number is important but not everything. The higher this is means
the higher interest they will charge. You should look for a company that has a
low APR. However, there are many other factors to take into consideration.
Hidden
Fees
Many companies will offer hidden fees. Even
though this is not a responsible lender, companies will still do it. You want
to make sure the company you choose does not charge a fee or at least is clear
about what fee they charge in their application, late fees, and if you decide
to pay early. Responsible lenders will tell you exactly how much you owe and
when you owe it. There are companies out there that are willing to help you get
to a stable financial status, and you want to make sure you are working with
one that will.
Instant
Money
Short-term loan companies often boast about
how fast you will be able to get the money after applying for the loan. Though
this may seem like a beautiful thing at the moment, you must realize this is a
tactic to keep you in debt. The faster you get the money the more likely you
will want to re-borrow money whenever you are even in a bit of a financial
crisis. This does not build up training to help you budget or save for an
emergency fund if you always have a way out. Some companies will offer money
the day of the application but allow for a particular time where you can return
the loan without having to pay any fees. Even this is better than nothing
because the cooling off period will allow you to rethink and see if you truly
need this loan or if you can find another source for the money with lower
interest.
If you are highly considering a short term
loan, try and think of an alternative solution. Perhaps you can put the money
on a credit card, or borrow from a family member. Remember that the key issue
is the high interest and if you can avoid that you are at a better state
financially.
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