It’s great to have a resource to rely on when you need money. Short-term lending options give consumers the financial relief they need, often overlooking many of the shortcomings that traditional lenders would frown upon. Easy online applications and several hundred dollars deposited into your account can make handling emergencies a breeze. As beneficial as short-term loans can be, many people make a lot of little mistakes that end up costing them a lot to repair. Unless you want to end up in the same boat, here are some borrowing mistakes you’ll want to avoid.
Forgetting About Fees
When budgeting for short-term installment loans online it can be easy to forget to calculate additional fees. Though most remember to calculate the interest, there are often other fees associated with a short-term loan that must be repaid. Forgetting to budget for these could result in an overdrawn account (if payments are being debited from your account) or even more fees added to your loan. Remember to review all terms of the loan and have a clear understanding of fees.
Neglecting to Shop Around
Though you might be in a bind and need to get cash right away, accepting a loan agreement from the first lender you come across may not be the best idea. As all loan companies are different, neglecting to look around and compare rates could result in you paying more for a loan than you needed to. Shopping around allows you to see which loan company has the better loan terms and interest rates.
Not Making Timely Payments
Many borrowers neglect the importance of making timely payments. Either thing come up that they feel take priority or they couldn’t afford the loan payments, to begin with. Whatever the reason may be, failing to make timely payments only adds to the problem. Most short-term lenders will tack on penalties and additional fees. Not to mention, if the funds are being debited from your checking or savings account, you’re also looking at additional charges from your bank and a potential decline in your credit score. Make sure that you’re fully aware of when payments are due and how much you’ll need. If you need extra time or something came up, it’s always better to contact the lender than to neglect the payment.
Impulsive or Emotional Borrowing
Borrowing impulsively or emotion is the worst mistake you can make. It can cause you to request funds when there really isn’t a need for them. For instance, borrowing funds because your only car broke down may be the only way to purchase new transportation. However, borrowing funds to buy a new car because it looks nice or you want to compete with others is impulsive and could cause you to start making payments on something you didn’t necessarily need. Before borrowing unnecessarily, wait at least a day to see if what you’re really borrowing the money for is a necessity.
Borrowing More Than You Need
It can be tempting to borrow more funds than you need when the lender has pre-approved you for more than you asked for. Though the lender may feel that you can adequately handle the amount they’re willing to loan you, if you don’t need it, there’s really no sense in borrowing it. Taking out additional funds, in the long run, costs you more in interest and fees and increases the likelihood that you won’t be able to repay it when the time comes.
Not Asking Questions
Though many short-term loans are to be completed online, that doesn’t mean that you can’t speak with a representative if you have questions. Remember, it will be your responsibility to repay the loan, therefore, you want to make sure that all your questions and concerns have been answered. No matter how silly you think the question is, it’s better to ask it than to avoid it and pay later.
Online short-term loans are a huge convenience, but they are also a big responsibility. Taking out a loan is a huge undertaking. It is a decision that shouldn’t be rushed or done impulsively. Take your time and review all your options before applying for a loan. You can avoid a lot of regrets and save yourself a lot of money if you take your time, review the terms, and steer clear of the mistakes listed above.