Getting a loan can often seem like the best way to solve your money issues, especially if you’re 100% sure you’ll have the means to pay it back. In this article, we want to explain 3 big mistakes that you need to avoid when you desperately need a loan. Whether you’ve spent too much this month or an unexpected cost has put you in a jam, when looking for the right loan, these are the things you need to watch out for more than anything else:
Applying for loans that hurt your credit score
Long-term loans are usually based on your credit score. Not only will a long-term loan take longer to process, they’ll require you to have a great credit history. Even if your score is in perfect condition, the money won’t reach you for weeks or days. If you need the money as soon as possible, the only loan that will get you the funds in hours is a short-term payday loan.
If your credit score is low and you try to apply for a long-term loan that’s outside your eligibility, the credit agency handling your assessment will likely decrease your score even further. When you need a loan and you’re conducting your search for options, make sure you don’t complete any applications until you’re absolutely sure that the loan in question is absolutely perfect for your needs.
Never had a loan or credit card before? Then your credit score is going to be on the lower side of the scale. One of the best ways to build your credit score is by using a credit card as responsibly as possible. This means repaying the balance as soon as you can each month or using the card as little as possible. The thing is, if your credit score is low, you’ll likely only be approved for a secured credit card. These cards require that you make a payment upfront which is not going to be an option if you’re currently short on cash.
Payday loans don’t require a credit check at all. These are the type of loan we offer at Quickle. A credit check isn’t unnecessary with these short-term loans because you’re meant to pay them back within weeks, not years. The main thing we look for is proof that you have a solid income. As long as we can see that you can afford to pay back what you’ve taken by your next payday, we’ll be happy to help. Here’s another mistake borrowers can make when they need a loan:
Not Considering other options
The first thing you should ask yourself before you borrow is, do you really need the loan? You might be able to get through your situation by getting rid of old things that you don’t need anymore. Granted, this option takes time, so if you’re in need of the money as soon as possible, selling old stuff won’t be the best way forward. Can you borrow from friends of family? It’s often hard asking people you know for money but if they’re close enough to you, you could get away with borrowing an amount without having to pay any interest or fees.
The other reason to ask yourself if you really need the money is to prevent yourself from taking on debt unnecessarily. One of the easiest mistakes you can make with money is to borrow far more than you need to. Do you need to money to settle urgent costs? Or are you borrowing to buy something that you could live without? If it’s the later, you can save yourself a world of trouble by saving up and buying when you can afford to spend your disposable income.
Rushing to grab the first loan option you find
Just like with any other product or service, it’s well worth shopping around when you need a loan. You’re not just looking for the final price in terms of fees and interest rate, customer service and credibility is very important too. See if the company has a contact address and customer service line. If they don’t, you’d better keep looking for other options. Are they mentioned on any large finance blogs? If so, what are people saying about them?
Check to make sure the loan company is reputable and you’ll avoid running into trouble down the road or paying far more than you should be.
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