Borrowing money is something that we all do at some point in life. However, the real problem is where and from whom to borrow money from. Today, it is possible for you to borrow money online and it’s not as hard as you might think. The first step to borrowing money online is to find a lender that you really like. There are so many money lenders online so you will not have any hard time finding one. However, when trying to find a lender, you need to do as much research as you can. Only settle for lenders that have been in the business for a long time and who have good reputations.
When borrowing money online, you need to take all the necessary precautions. Remember that while the web is a rich source of information, it is also a place where many scammers hunt. You do not want to become a victim of the internet and the only way to do this is by being cautious. There is high demand for short term loans today and many online lenders are using this as a means of luring unsuspecting victims. Many lenders will promise you long repayment periods, or fast loans. However, even when the loan seems really affordable, make sure that you do not only look at the surface. It is only by being cautious that you will uncover any bad terms, or hidden charges.
When borrowing money online, you need to know exactly how much money you really need, which will be the principal amount. It is hard to borrow money if you do not even know how much you need. Once you have established the amount of money that you need, make sure that you strictly borrow that amount. Regardless of how much more a lender is willing to give you, only take the money that you need. Borrowing more money than you need means extra unnecessary expenses or a higher interest rate among others. Additionally, by borrowing more money that you need, it might be a little hard for you to repay the loan.
Before you look to borrow money in the UK, always calculate the repayment amount. In other words, you need to calculate whether or not you will be able to repay the loan when it finally matures.
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There are various things to consider when it comes to responsible lending. There are aspects that you can control, and those that are determined by the lender. We’ve broken these down below:
Things For You To Consider
One of the most important rules of borrowing money is that you should only use borrowed funds to make wise productive purchases. All forms of borrowed money or cash advance that you receive are not your money. It is just money that you are allowed to use now and pay back later at a cost. The cost of using that money is the interest you are charged. Do not use borrowed funds or credit cards to throw parties, watch movies or go for vacation. Why spend extra that you do really have and place yourself in debt when you could really do without that particular thing?
Another rule is that one should not be too quick to borrow money. Each time you use your credit card you are taking a loan that you would pay back with interest. Use your cards wisely. Try to avoid using a loan to pay for a loan, because you are just increasing the cost of the money borrowed. Try to be prudent, work with a budget and save more. You should also try to keep your debt/income ration low. If a larger part of your income goes to servicing debts, then you are in trouble.
Learning about short term loans and control of personal spending is also important. Consumers learn to borrow money responsibly by prioritising the purpose of the loan, whether for home or business expense; understanding the types of loans available and responsible lending practices; comparing lending terms, conditions and costs; and learning what it means to be responsible when taking out a loan.
You also need to look into whether you want payday loans direct lenders, or a broker. A Lender will give you the loan, whereas a broker can help you find the best lender.
What Is A Responsible Lender?
All lenders do not have fixed rates of loaning people money. Shop around
for cheap rates, negotiate and you can be amazed of the good deals you could find.
While lenders have a legal and ethical responsibility in lending money to individuals, each person who makes the decision to borrow money is expected to do so responsibly. Comparing what lenders have to offer helps borrowers to get the best value for their money.
Lenders assist financial borrowers by screening their personal financial health for suitable short term lending, and by providing information about taking out and repaying loans. Creditors look at each person’s financial strength to determine if they will be able to meet the loan requirements.
The credit score is an indicator of an individual’s ability to repay a loan. Gaining a credit report from a credit checking agency helps potential borrowers understand their credit score and how to manage their credit-worthiness and their ability to repay debts, such as a short term loan.
Responsible lenders turn individuals down for loans when their credit score reflects an inability to maintain a level of loan repayment. Being responsible in managing debts means money repayments need to be prioritised and made on time to prevent default, interest accumulation, and runaway debt increases.
Options For Borrowing
Taking out a short term unsecured loan is a quick and easy way to cover an emergency expense or cash flow problem. But what types of loans are available to you, and what are the pros and cons of each?
Bad Credit Short Term Loans
The advantages of bad credit short term loans are fast pay outs, and a simple process of applying. However, interest rates on payday loans are sometimes as high as 4000%, so it’s worth searching for an online loans provider who offers a similar service for a lower rate.
Peer to Peer Loans
Otherwise known as ‘social lending’, these are a relative newcomer to the loans marketplace where those with savings invest their money, which is then lent out to those who need to borrow. Peer to peer loans offer the advantages of better interest rates for borrowers and investors, and a friendlier and more human service than high street banks.
These can be a useful way of borrowing, provided you pay off the amount in full every month. If possible, apply for a 0% introductory rate credit card, to avoid racking up high interest charges.
Using an authorised overdraft facility is a cost effective way of short term borrowing, but depends on good credit. If your credit history is poor, then you may want to consider a bad credit loan instead.
If you’re still not certain of the best option for you, if you want to borrow money online, we’ve made a checklist of the things you should and shouldn’t do:
- Compare loan products and lending practices for the best money value
- Choose a responsible lender and cost-savings loan product
- Understand all the terms and conditions of your loan agreement contract
- Involve individuals who are affected by your borrowing decisions, such as a spouse
- Borrow money for a specific purpose that enhances your prospects
- Borrow money amounts within your means to repay
- Control money spending and meet loan repayments
- Obtain a loan without early repayment penalty
- Repay a loan promptly to avoid interest accumulation
- Maintain savings wherever possible
- Avoid loan product and lender comparison due to a lack of time
- Borrow money with the intent to save it
- Default on loan repayments