Do You Need to Lend Cash? Here Are Some Financial Tips to Follow
Are you in a bad financial situation? If so, you do have options. One of these is to take out a loan. There are lots of payday lenders operating online today. However, you do need to make sure that you are in a good enough position to make monthly repayments. Defaulting on a loan can lead to your credit score being negatively impacted. Also worth noting is that if you default on a loan, you could end up having a debt collection agency dispatched to chase you. This post will explore this topic in more detail, telling you what you need to do in order to get a loan.
Find a Reliable Lender
If you want to borrow money, the first thing you need to do is find a reliable lender. There are many payday lenders operating online today, so finding companies offering loans shouldn’t be difficult. You need to make sure that the instant money loan company you borrow from has good reviews and is regulated by your nation’s specific financial conduct authority. Most payday lenders advertise their licensing status on the footer of their homepages, showing the world they are being regulated. A lender’s reviews can further illustrate their authenticity. Make sure that you read them and see what past and present clients have to say about the service that they offer.
Estimate Monthly Repayments
You should never borrow money unless you are totally confident that you can make each and every repayment on time. A lot of people make the mistake of borrowing money from payday lenders without weighing up the consequences of defaulting against the benefits of borrowing. If you are in a very bad financial position and do not have enough money to make repayments towards your loan with interest added, borrowing is a bad idea and should be avoided. Most payday lenders will give you an estimate of how much you are going to have to repay towards your loan on their website when you make a loan quotation. This information should also be available in your pre-contract information booklet. Go through your earnings, calculate income and expenditure, and make sure you can afford to make repayments. Failing to make repayments can lead to a default.
Understand the Consequences
Before you borrow money, you need to educate yourself about the consequences of defaulting on a loan. Defaulting is when you miss two or more payments, and the loan is canceled. When you receive a default, you are ordered to repay the money owed right away. That said though, most lenders give people the opportunity to make repayments over a period of months rather than all at once. Once a default is issued, your credit score will drop. It can take up to six years for a default to be removed from your score. If you repay the loan in its entirety before the default period has ended, the default will be marked as ‘settled’ and your credit score will gradually start coming up again. Defaults can make you a very unattractive borrower and massively reduce your chances of being able to get loans or take out credit cards in the future.
Use Loan Comparison Sites
Loan comparison sites are great resources if you are trying to find loans but don’t know which lenders to work with and which to avoid. These sites compare lenders against each other, weighing up the advantages and disadvantages of working with specific ones. Comparison site reports will give you insight into working with a payday lender without having to contact them or read their reviews. Using comparison sites before you use a service is a good habit to get into. These sites make it much easier to decide whether a lender is for you or not. If you are going to use a comparison site, make sure that you use one that isn’t sponsored. If the one you are using is sponsored by a lender, their reviews are going to be biased. Usually, businesses legally have to declare sponsorships, so if the comparison site you are using is sponsored, they will say so somewhere on their website.
Answer Questions Honestly
When you are applying for a loan, you have to go through a series of income and expenditure questions designed to verify your ability to make repayments on time. A lot of times, lenders do not check people’s answers and instead take them at face value, accepting their applications without doing their due diligence. Because of this, you need to make sure that you answer questions on your application properly. Do not exaggerate, embellish, or ‘overlook’ things. While you won’t get into any serious trouble lying on a loan application, you can end up being approved for a sum that’s way out of your budget. Again: Borrowing money that you can’t pay back can have serious consequences for you and your loved ones. If you can’t make repayments and a default is issued, debt collection agencies could be tasked with recovering the lender’s money from you.
Sensible Borrowing
Finally, as mentioned several times already, make sure that you do not borrow more than you can afford to repay. A lot of people get excited when they see that they are approved for a higher amount, ignorant of the harm it will cause them if they actually borrow it. When you borrow money you cannot afford to repay, you run the risk of damaging your credit score. Your credit score isn’t a laughing matter. It will dictate whether you are able to get a mortgage, make or break credit card applications, and show lenders and other financial institutions how good you are with your money. Although it’s tempting to borrow the highest amount possible, make sure that you only borrow the amount you need. Think long and hard about what you are going to spend the borrowed money on and then borrow just the right amount.
Whatever you need to borrow money for, make sure that you borrow responsibly. Good money management is absolutely essential if you want to live a long, happy life. Getting into bad habits when it comes to borrowing can negatively impact your life in more ways than one. Make sure you only borrow as much as you need to and that you make repayments on time.
