What you need to take into consideration before borrowing money

Any financial expert will tell you that borrowing of money is a serious financial decision as any mistakes could you land you into financial problems. Any mistakes or laxity on your side could see you getting into a cycle of debt and we all know that getting out of a debt rut is not a walk in the park. While you might be between a rock and a hard place, it is always important to pause and do due diligence before borrowing money.

Irresponsible borrowing has serious ramifications on your future as it affects many aspects of your life such as your ability to get competitive insurance premium rates, ability to land a job, obtain a phone contract, and buy a home just to mention but few. In light of this, what are some of the considerations when borrowing money? What is it that you need to take into consideration before you take the first step in borrowing money?

Your ability to repay the loan

Most of the time, people are so desperate to get approved for a loan that they fail to factor the aspect of loan repayment ability. You see, while getting approved for a loan is an exciting thing and a happy moment, inability to repay the loan will be the cause your sadness and runaway stress. If your current financial position or monthly salary makes it impossible for you to repay the loan, it is advisable that you pause and think of an alternative. Applying for a loan that is a burden to you is catastrophic and poor financial decision making.

Reputation of the loan company

Of course, company reputation of a loan company is very important considering the fact that there are many scrupulous providers out there. You need to carry out due diligence to ascertain whether a given company is reputable or not. Doing business with a reputable company is the difference between getting competitive rates and being swindled. It is the difference between top notch services and poor services. You need to carry out proper background research to ensure that the same loan company you are dealing with is reputable and above board.

Purpose of money you are borrowing

The rule of thumb is that you should always borrow money for something you need and which makes financial sense. The fact that same day loans attract high interest rates means that borrowing for the sake of borrowing could actually get you into a debt rut. Don’t over borrow. Borrow the exact money you need and don’t get into the temptation to over borrow simply because your lender is willing to give you that money. Exercise financial discipline and you won’t get into a cycle of debt.

Terms and conditions

It’s a no brainer that many people rarely read the terms and conditions of a loan before signing on the dotted line. Well, this, in simple terms, is catastrophic. Unscrupulous lenders always hide surreal charges in the terms and conditions. Ensure that you read the terms and conditions and if there is something unclear, seek for clarification before signing it!

A sneak peek into the 5 most common same day loans myths

In all honesty, there is nothing as liberating as the thought of getting advance cash within the same day. With uncertainties of life and the fact that emergencies crop up at any minute, the assurance that you can get access to credit within a couple of hours is quite assuring if not the best thing that happened since the dawn of civilisation. It is, in no uncertain terms, a great feeling. That said, in spite of the many advantages of same day loans, there are still a number of myths associated with them which have, stubbornly so, refused to go away. Let take a look at some of the common same day loan myths. Shall we?

Myth 1: same day loan lenders are “loan sharks”

Mention the word “loan shark” and it is bound to invoke fear in borrowers. Loan sharks are known not to have the interests of their customers in heart but are simply concerned with extortion and enriching themselves. Well, while there are indeed a number of uncouth and unscrupulous same day loan lenders in the market, the assumption that all of them are unscrupulous and extortionists is simply out of context. There are indeed reliable and trustworthy same day loan lenders keen on assisting customers and giving them the best deals.

Myth 2: same day loans will worsen your debt situation

No doubt, if you have imprudent financial management, any loan is bound to worsen your debt situation. If you are not careful, you will definitely find yourself in a debt rut. That said, the assumption that same day loans will ultimately put you in a cycle of debt is fallacious so to speak. According to a study carried out in the UK, approximately 70% of the citizens in the UK apply for a same day loan once in a year. If it is really true that same day loans put borrowers into a cycle of debt, wouldn’t a substantial number of people be utilising this form of accessing credit more than once?

Myth 3: Same day loan lenders target individuals in bad financial shape

Proponents of this argument have indeed given same day loans a bad reputation. They argue that same day loan lenders target individuals in critical financial situation who are bound to default and therefore enrich themselves through penalties and high interest fees. Well, this assumption is not entirely true as same day loans are advertised to individuals of all classes. In addition to that, one of the requirements before one can be approved for a same day loan is that a person needs to be in a steady job.

Myth 4: same day loan lenders harass and bully borrowers when they default

Well, in order for this statement to hold water, we need to understand the meaning of the word “bully” or “harass”. If bullying means collecting what is due to a lender in a professional, lawful and respectful manner, then perhaps one needs to revisit their idea of bullying. Majority of same day loan lenders except the unscrupulous ones ascribe to the highest ideals of ethical conduct and best business practices. In fact, most try to work out something to reflect the current financial situation if a person is going through financial difficulties.

Myth 5: same day loan lenders charge extremely high interest rates

To a greater extent, there is some truth in this considering that same day loan lenders shoulder a great risk considering that there is no collateral to fall back on. However, the onus is on you to do your research, make comparisons before doing business with a particular lender.

To sum it up, there is no doubt that same day loan lenders are a necessary evil especially when you need cash fast!