Covid-19 has totally decimated families – from illness to finances I don’t think there is a single household that has not been affected and for each of us things are different.
For me I am self employed and have been lucky enough to qualify for the self employment grant, however that doesn’t mean finances aren’t still tight. We needed building repair work midway through lockdown that we needed to have done on the roof and chimney.
I have no doubt for us personally money is going to be even tighter till schools return and I can work again. However, even having tight finances doesn’t mean you need to rush out and panic when looking at taking on debt of any kind. Your decisions need to be well balanced and thought out and if in doubt you need to ensure you seek advice from an independent financial advisor whenever you can!
Loans come in various forms such as credit cards, personal loans, car loans, home loans, etc., but short term loans are different. These types of loan are typically for lower amounts of money than a loan that you may take out from a high street bank, and will usually be repaid over a much shorter period of time – as low as three months. They also come with much higher rates of interest. There is no denying that they can be extremely helpful in a situation where you need some immediate cash, but it is still worth taking note of the following points before you finalise the decision.
Is the Amount Too Big?
The best part about taking a short term loan is that despite charging high rates of interest they can be more flexible re the amount you need to borrow. So, the bottom-line is, you should not borrow a penny more than you need to. Borrowing too much money, with the high rates of interest charged on these loans, could potentially push you into debt, so be careful with the amount you borrow if you feel this is the only route available to you.
Be Sure You Can Meet The Repayments
If for any reason, you find yourself to be unable to make a repayment – please talk to your loan provider as early as possible instead of just skipping the payment. You may be able to negotiate an extension, but like anything to do with owing money, if you bury your head in the sand you are going to make it 10 times worse – so please tackle any issues head on.
While short term loans can help solve an immediate financial crisis, it is always worth taking some time out to think about the reason why you are taking it in the first place. These loans are usually not supposed to used to buy a new car or pay for a holiday, because of their short-term nature and they do charge a fortune in interest. Therefore, your reasons should mostly centre around emergency situations such as a boiler breakdown or some other unexpected expense that you absolutely have to cover in a timely fashion.
Go through the Terms & Conditions
Always go through the applicable terms and conditions before signing up for the loan and make sure that you are dealing with an FCA regulated lender or broker such as Growing Power and not some shady organisation disguised as a credit company. Do not be discouraged if you have do not have a great credit score or you cannot procure a guarantor because those are not always necessary for these types of loan.
*collaborative post*