We all come to a point in our lives where we need a little financial help. It might be for something that we want to do, like take a special vacation or add-on to our homes. Or it might be for something that we need to do or have to do, like catch up on late car payments or pay a huge tax bill that we weren’t expecting. We know we should be saving for such scenarios, but few of us actually have enough in savings to cover all the financial issues we might be facing.
Getting a loan can help. However, not all loans are created equal, and you need a little education before you get a loan to make sure you don’t get into the wrong situation. Here are a few dos and don’ts for you to follow when getting a loan:
There are a lot more loans out there than those offered by the banks, which may not even be available to you because of your credit. You can get cash advance loans, title loans, pawn loans, and many more types of loans. Some are secured, like bank loans, which means that you need to have some collateral or a solid credit rating to be approved. Some are unsecured, like cash advance loans, which means that you can get them even if you don’t have good credit or something value to put up in trade. You need to explore all the loan types available to you to know which will be right for your circumstances and which will offer you the best terms.
Because you have so many loan options, you don’t need to take whatever loan terms are offered. You don’t have to pay astronomical interest rates that will make it nearly impossible to pay back the loan, and you don’t need to accept a payback term that is too short for your financial circumstances. Shop around. Explore the different loan options, and talk to different lenders of each loan type. You may even be able to negotiate the terms so they are more favorable to you.
You might stumble onto what you think is a great offer and blindly sign in your excitement. Then you find out that the interest rate is daily, not monthly, or that the interest rate jumps astronomically if you’re late for a payment. There are all kinds of ways that the terms can change without you realizing, or that you can be paying more than you expected in interest or other fees. Read all the fine print before you sign to close the loan. Make sure you know what you are getting yourself into before you don’t have any other choices but to pay according to the terms.
Many loans require a credit check before you can be approved. However, every time your credit is pulled, it counts against your credit score. The idea behind this is that if a lot of people are checking your credit, you are applying for credit, which means that you are likely having some financial difficulties. So, the more loans you apply for to see what kind of terms you can get, the more damage you might be doing to your credit, which will result in worse loan terms. However, if you apply for loans that don’t require a credit check, such as a cash advance loan, you don’t have to worry about any damage to your credit. You can get the money you need without hurting your future financial prospects.
Applying for a loan can be an intimidating process. You might be confused by it and scared to ask questions, which can make you vulnerable to accepting exploitative terms. It’s important that you follow these dos and don’ts to help you get the right loan to get through your financial difficulties or to meet your financial goals.