People sometimes borrow more money than they actually need. There are several reasons for this.
One is that people think “hey, I’m already borrowing this amount of money. Why not borrow a little more?”.
Another reason, and the more common one, is that a lot of places will only offer larger loans. You need to be careful here.
There are places out there that will try to get you into a bigger debt than you need to be in. This is because, ultimately, loans pay off extremely well for banks.
If you need a big loan, then go for it. But should you aim to get as close to the amount you need as possible?
Or should you walk away with a little more? Say you need $10,000.
The institute you’ve gone to is offering a minimum of $25,000. Should you just take the money, or look elsewhere?
One of the few perks of our depressed economy right now is that interest rates are low. Lower rates of interest have been having a positive effect on the economy. Is it possible they’ll rise to old highs?
Sure. But that doesn’t mean you should rush to borrow more than you need. The repayment methods for larger amounts of money may do more damage to your finances than good.
Monthly repayments will not be as high if you borrow a small amount.
If it is just a small amount you need, it’s worth asking yourself if you really need a loan. What are you using the money for? Maybe you’re thinking of getting a luxurious item. A computer upgrade, maybe? Or a holiday? Well, it might be worth pausing and thinking.
Are you sure you couldn’t wait a while and raise the money yourself? Give yourself at least a few days to consider it. If you’re sure you can handle it, go ahead and get yourself a cash loan!
Alternatively, you could consider getting a credit card. When you want to borrow money for the short-term, a credit card is often a popular choice.
It’s also one way you can start establishing a credit history. If you qualify for a 0% interest credit card, then you can use that credit without having to pay anything when paying the money back.
Several credit cards offer rewards for using them. Some even offer you cash back! Cash back might not mean what it sounds like, though. Be sure to read the fine print, and look up the relevant information online.
Perhaps the most obvious piece of advice is to make sure you have a stable source of income before you take out a loan. An income is, of course, a requirement to take out any loan. But if you do want to borrow a little extra, make sure you only do so if you’re making enough money to offset the added interest rates.
You need to keep in mind the possibility that you could lose your job.
We hope that doesn’t happen, but you need to be prepared for these things!
This will make repayments harder, so remember this when decided how big a loan to get.
Having trouble getting a loan with bad credit? We’ve got some advice for you!