Personal loans are so convenient to so many people - who need cash urgently. However, because of the desperate situation, they fail to thoroughly read the contract including the fine print and also fail to give thought to how they will repay this loan.
Small loan websites make the whole process sound so easy that they hook customers’ almost instantly. The situation people find themselves in afterwards is a labyrinth of fees and surcharges.
Before going for personal loans, here are a few things to consider:
• Emergency fund – Raid your savings. Sure you were saving this for a rainy day, well news flash this is that rainy day.
• Bank loans – This may take longer and you are not guaranteed of being approved but at least it is more secure, has a smaller interest rate, a longer term, and is guaranteed to abide by the laws.
• Credit card cash advance – People mistakenly assume that this is more costly than a small loan. What they do not consider is the longer term. If one is unsure of their ability to repay the loan on time, then it is better to choose this method. It may have a 3% higher interest rate but at least the term is as flexible as it needs to be.
• Borrowing from a friend or relative – this may be embarrassing but it probably is the safest choice. Just get it in writing to avoid any misunderstandings that might happen later.
• State laws – different states have different rules regarding instalment loans. Get to know these in order to avoid getting cheated by lending firms.
If the result indicates that a small loan is really needed, then always keep in mind that:
• Instalment loans from websites including www.lotsalolly.co.uk seem to have a lower interest rate than others. This is not so. Their terms usually last for two weeks unlike other loans, which usually last a month. If, for example, a small loan has an interest rate of 10%, in a month’s time that would be 20%, making it equal to or even higher than all the other loans.
• Read the fine print of the contract. Chances are, there is where all the traps are stated. Lending companies prefer getting the payment from a customer’s bank account. However, if the customer cannot pay in time, the company will keep on deducting fees from the bank account until the customer has insufficient funs, which will garner him more fees from the bank. This is how one gets into debt. Better to arrange a one time full payment with the lending company via check than have them deduct it from the bank account.
• The most important thing is to make sure that money will be available by the due date. If not, better go for other loaning options.Financial security is a hard thing for people to grasp especially in the current state of our economy. We have to do our best to protect ourselves from getting in debt. If we rely on personal loans, we will inadvertently dig ourselves into a hole we may never get out off.
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