Financial troubles are a problem that can afflict any one of us. Despite the best-laid plans and intentions, there’s ultimately no specific way to guard against them. All it takes is one unexpected bill or charge, a reduction in your working hours, or a sudden redundancy, and you can find yourself unable to cover your overheads.
When disaster strikes, many of us turn to borrow options as a solution. Savings don’t last forever, and family and friends don’t always have the funds to help you. Lenders do, and short-term loans are one of the most popular borrowing choices on the market today.
Offering a set sum of money that must be repaid within an agreed-upon timeframe, these loans can be the ideal solution to your monetary troubles. However, there are thousands of lenders to choose from, and narrowing them down to the best provider and loan for you can seem daunting. If it’s a challenge that you’re facing, here are three things to consider before taking a loan.
A short-term loan can be the ideal option for helping you out of a monetary bind, yet lenders are not providing you with assistance out of the goodness of their hearts. They stand to benefit too, and one of the main ways that they turn a profit is through the interest rates they charge. These will vary from lender to lender, with everything from the reasonable to the unreasonable on the market. Rather than just comparing these rates individually, keep an eye out for lenders that offer interest rate caps; these are one of the best tools for preventing your debts from spiraling beyond your control.
Another important factor to consider is the repayment plan attached to your loan. This determines how quickly you’ll have to pay back your borrowed amount. The longer it stretches on, the more you’ll pay in interest, yet it’s always better to err on the side of caution; if you choose an overly ambitious repayment schedule, you may not be able to meet it, which could have some rather disastrous consequences. Remember to assess how flexible this is: some lenders will allow you to pay your debt back early, thus minimizing the charges attached, while others will insist that you stick to the agreed-upon payment plan.
One final factor to consider is any additional costs attached to your loan. These could be disguised under a number of labels, but the result is always the same: they’ll increase the total amount you’re expected to repay. To avoid signing up for them unwittingly, be sure to always read the small print before committing to anything.