Many of us are in a position where we may need to borrow extra money at the current time, or in the near future. This can be very daunting and stressful for those involved. But borrowing can be done in the right way, and be advantageous to those that use it. We have done a guide to sensible borrowing.
Simple as that. You can only borrow what you can pay back. Work out how repayments fit into your monthly budget. If the figures do not add up, then you should not borrow. That is the key to sensible borrowing. There must be a plan to repay what you need now.
It’s easy to take the first offer you see, or use your own bank to set up a deal. Convenient too. Perhaps your bank portrays their rates as the best around, so you feel no desire to look elsewhere. But most lenders claim that. It’s called marketing. You need to see what is out there, and get the best deal for you. Even the most marginal of interest drops could save you a significant amount of money over the term of the loan.
The first rule of borrowing is that you do not borrow for treats but for essential needs. And nothing else. But an offshoot of someone borrowing for the right reasons, may be that they think they can add a bit more onto the loan and have a treat too. This is a terrible idea. To reiterate. Only borrow the precise amount you need and for the right reasons. Borrowing extra will simply put extra pressure on you financially for every month you have to make a repayment.
Before you commit to a loan, explore other options. Ensure that there is no other way for you to meet your financial times. Many sites will ask you to consider borrowing from friends or family. This is definitely an option, as it saves you the stress of the process, the interest charges or other fees, and you do not have to worry about passing a credit check. But for some, it can be embarrassing asking those you love for money. I understand that all too well.
Other things to consider are reducing your costs. But once you have borrowed, set out a spreadsheet with incomings and outgoings, so you can plan your monthly finances. You do not want to be in a position where you struggle to make repayments on credit.
You do not know what the future holds. So you need to know that whatever happens it is safe for you to borrow. Now no one can plan for some of the things that have happened this year. But you can put yourself in the best position to cope with the unexpected. And one way to do this is knowing exactly what you sign up for. Understand fully the terms and conditions. Comprehend the consequences of a missed payment, whether you can pay loans off early and so on. Be prepared.