Everyone gets in a financial jam from time to time. When you don’t have the means to take care of a personal matter, often you look to lending service providers to help bail you out. While this can certainly be a great way to resolve a personal matter before things get out of hand, if you’re not careful you could end up in more trouble than you started out with. Below are some suggestions on how to avoid being a bad or ill-informed borrower:
What NOT to Do: Borrow More Than You Can Afford
You’re applying for a short term loan through a reputable service provider and are offered more money than you had originally requested to borrow. The amount of money you’re approved for seems enticing and so you decide to go ahead and sign an agreement for the full amount. It’s getting close to the payment due date and you can’t afford to pay it all back at once so you decide to extend the loan terms. This essentially costs you an extension fee and does not pay down the balance on the loan.
The dumb thing about the above scenario is the fact that they knew before taking out the loan that they couldn’t afford to pay it back. Now they’re still on the hook for the total amount of the loan along with any other associated costs for extending it.
What You SHOULD Do: Borrow What You Can Afford
It is best to simply take only what you need and not let greed get in the way. If you’re considering the possibility of applying for a loan through a company such as Blue Trust, review the various rates and fees associated with each amount you could be approved for. Then, determine whether or not you can afford to pay the amount you’ve been approved for. If not, simply contact the service provider, which in this example would be BlueTrustLoans.com and let them know you’d prefer to only take out the amount you believe you can afford. This saves you the stress of having to come up with money you don’t necessarily have.
What NOT to Do: Accept a Loan Without Reading the Terms
Your pipe has burst inside of your home and you’re in a rush to get it fixed. You apply for a loan and instantly get approved. You receive your loan agreement form and only check to make sure that you’ve entered the correct contact and banking information. You skip over the fine print, complete your e-signature, and send the contract back. You then can’t afford to pay back the loan so you allow the payments to bounce. As a result you now have to pay a bounced check fee to the loan company as well as any costs your bank assessed.
What You SHOULD Do: Read the Contract Fully
Had you taken the time to review the loan agreement you would have been aware that skipping out on the payments would incur extra charges including the total cost of the loan and interest. Instead, you were in a rush and it costs you big time. It is recommended that you read the loan agreement in its entirety so that you know what your responsibilities are as a borrower.
What NOT to Do: Neglect to Research the Loan Company
You conduct an internet search to find out about short term lenders servicing your area. You happen across what seems to be a reputable site and enter all of your personal information. The next thing you know, you’re getting calls from other lending institutions and other financial service providers that you don’t recall giving your information to. You also find out that your account has been debited a certain amount without your permission.
What You SHOULD Do: Research the Loan Company
While short term loans are a great way to resolve immediate financial issues not all companies are created equally. There are tons of scams out there to get your personal information and you don’t want to fall victim. Therefore, it is pertinent that you do your due diligence and conduct a background check on the company before giving out personal information. A check with the Better Business Bureau for ratings and complaints and a quick check of consumer reviews can give you an idea of the type of company you’re dealing with.
While taking the necessary steps to avoid financial pitfalls is the best course of action, borrowing funds can come in handy when you’re in a jam. Short term loans can certainly help you out when you’re in a jam, but only if you do as you should. Taking out what you can afford, reading the contract in its entirety, and making sure you’re working with a reputable company are all essential concepts to keep in mind. If you follow each of these suggestions listed above you can have a positive experience with borrowing funds and can maintain a good reputation should you need to reach out again in the future.