4 dangers of personal loans (and how to avoid them!)
Summer is a fantastic season for hiking. Who doesn’t love the smell of fresh pine needles, mountain flowers and is it a skunk? Any experienced hiker will tell you that a long walk without knowing what to expect can be quite dangerous.
Just like hiking, getting a personal loan requires knowing the dangers. Learn how to avoid these four dangers of personal loans before choosing a lender.
1. Apply for a loan for the wrong reason
When considering a personal loan, you need to consider all of the options before applying for a loan. You may have a friend or family member who can lend you money. Maybe your employer wouldn’t mind sending you money. Could you get overtime or a part-time job to get the money you need? If you only need a small amount of money, a personal loan is probably not the best option. However, if it is a costly emergency, e.g. For example, a car repair or a medical bill, you may need it.
Before borrowing, ask yourself if the money you are asking for is for a need or a wish. Are you paying for a cute new mountain bike? It’s a wish. You don’t really need it. But paying for emergencies for the broken leg you suffered while riding your new ATV? It is definitely a necessity. (And if it is a serious and expensive emergency, and we hope it is not, check out our blog post on how to deal with major financial emergencies.)
2. Take the first loan they offer you
The American consumer is now more powerful than ever. In the past, we may have believed what we were told on television, in the newspaper, and on the radio. But now, thanks to the Internet, it is the people who have the power. In the ExpressCash Safe Personal Loan Guide, you will find advice on what to look for both with a loan and with a lender. And remember: if you don’t like a lender’s offer, you should look for a better offer! Check not only the loans of a company but also their ratings and customer ratings. Do your customers like to work with them? Are you reasonable, friendly and responsible? Are you accredited by the Better Business Bureau? Read customer reviews on sites like Google.
If you bought camping gear for a multi-day hike, you wouldn’t be buying the first store you saw. The same goes for a personal loan. Taking the time to find the best possible loan can save you a lot of time, money and hassle.
3. Skip the fine print
Some lenders may try to force you to sign quickly. They may want you to miss certain details, for example, B. Additional fees and charges. Make sure to read the complete contract before signing it. The fact that a lender tried to pressure you is also a big red flag. It is the clicking that lets you know there is a snake. If you don’t understand anything about your loan, ask.
The most important things you need to know before accepting the loan are 1) the APR, 2) the term, 3) the number of your payments and 4) whether the interest rate is fixed or variable. A fixed interest rate means that interest rates stay the same for the duration of the loan, while a variable interest rate can go up and down.
4. Accept more than you need
Another tactic that some lenders use is to offer you more money than you need. This can result in higher monthly payments and more money for interest and fees. Find out exactly how much you need and don’t be convinced to borrow more (learn more about how to be safe with bad credit).
You also want to know how much you can pay in monthly installments. It’s like a hiker who knows how much weight he can carry in his backpack. If your monthly payments are higher than you can bear, don’t go down the street. The best way to find out how much you can afford is to set a monthly budget before taking out a new personal loan.