6 things to think about before taking out a short-term loan -Part 1
When you find yourself in need of some quick money between paydays, your options are going to be limited. Banks and financial providers have loans over short periods, but that is often at least 6 months with minimum borrowing amounts into the thousands. If you only need the money for a couple of days, then a payday loan may be a convenient solution.
If you are looking into using a payday loan, you will need to be aware of some of the pitfalls that are involved in using payday loans. Being aware of them may help you avoid them, so that you can have a positive experience when borrowing money short-term.
The next three points all have to do with finding the right company and protecting yourself and your information.
The first thing to think about is – why you are looking into taking out a short-term loan, is it so you can buy something you want, or is it an emergency situation that needs a cash injection to remedy? Most responsible payday lenders will recommend only using their services for the latter, which is sound advice. These loans are designed for a very short period of time; they have high interest rates so the company makes a return, if they are used for anything other than one-off emergency situations then you run a thin line of putting yourself further into debt.
The second thing you should be aware of when taking out a payday loan, is how much lenders will let you borrow. Most, if not all, lenders will have a calculator on their website which will let you input your wages and expenses and will then pop up with a number they say is safe to borrow. If the site is genuine, then the calculator should be fairly good, but a better thing to do is work out what your limits are yourself. By going into the loan process with a sound knowledge of what your limit is, you can prevent impulse borrowing when a site claims you can safely borrow an amount higher than you can.
Thirdly, you will need to verify that the company you have chosen is a legitimate lender. In New Zealand financial providers need to be registered – this will mean that they have a registration number. All legitimate sites will have this on their website for you to access and if it isn’t, they should be more than happy to give it to you over the phone. If a site does not display their number and does not want to give it to you over the phone or in an email, then it is a sign that you should move on to another lender.
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.