It’s never the best situation to rely on borrowing money to help you out of a situation. You may feel frustrated that you have to do so. However, sometimes it’s necessary, so understanding how the emotions behind a decision to borrow can impact the choices we make can help us make better, savvier decisions. After all, you want to make as rational a decision as possible when it comes to money.
One such choice is short term loans, especially if you need to address more urgent financial needs. Here, we’ll look at the impact that comes with choosing to borrow in the short term and how you can make this work for you without causing further financial strain.Top of Form
Should I Choose Short-Term Loans?
The question of whether to borrow really comes down to your situation – is it something you can resolve without credit, such as using savings or waiting until your next payday? Is it urgent? Do you have an alternative option such as friends or family to help? Thinking clearly and taking the initial emotion out of the decision can help you avoid making a rushed one. It can be difficult when you may have an initial feeling of worry or that you have no time to think long about it, but taking a breath and considering your options is the best step forward.
Deciding whether to choose a short term loan to help quickly resolve the issue involves careful consideration. Think about whether you will be able to sustain the repayments without a problem and whether you are happy with the interest charge for this. Be sure to choose a Financial Conduct Authority (FCA) authorised lender and that there are no hidden fees in the credit agreement. By doing so, you can make short term loans work for you whilst still making a quick decision.Top of FormTop of Form
What Happens If I Don’t Make A Considered Choice?
Securing a short-term loan can initially feel like a relief, offering a quick fix to your issue. If it was made for the right reasons, you can feel happy with your decision. However, you want to be confident that once the repayments start these can be maintained. If say you have chosen a small loan for 3 months, are you sure each month you will be able to do so? The initial relief the loan brings can quickly be replaced by stress each month if you are struggling to maintain it.
Like any form of credit, you’ll need to maintain the necessary repayments to avoid late payment charges and avoid defaulting on the loan by accruing too many arrears. This can also impact your credit rating further, making it more difficult to borrow in future if you need to.
Making a calm, considered choice will enable you to think realistically about the loan and repaying it. Fortunately, many short-term lenders will assess your affordability before approving a loan, as they’ll want to ensure you can afford it. Working to responsible lending guidelines, they won’t agree to the loan if they feel it will cause too much strain on your current finances, so if you don’t have time to assess your finances before applying, the lender will do so along with a credit check.
Reducing The Stress With A Savvy Decision
Although you may have a strong feeling to apply straight away for a loan, it can be better for your finances, and your wellbeing, to take a step back and consider your options first. Rushing into a decision can make you feel better in the moment, but could lead to problems sustaining the loan. If possible, speak to friends or family about the issue you are having as this support can be invaluable during difficult financial moments. There are free resources online that can help you too such as Money Helper and Step Change if you need independent advice and guidance. If you’ve carefully thought about it and can sustain the repayments, a short term loan can be a solution to get you back on track. Top of Form
Author name: Kelly Richards
Author bio: Kelly is the founder of the Cashfloat blog and has been working tirelessly to produce interesting and informative articles for UK consumers since the blog’s creation. Kelly’s passion is travelling. She loves her job because she can do it from anywhere in the world! Whether inspiration hits her while sitting on the balcony of a French B&B, or whether she is struck with an idea in a roadside cafe in Moscow, she will always make sure that the idea comes to fruition. Kelly’s insights come from her knowledge gained while completing her degree in Economics and Finance as well as from the people she meets around the world. Her motto is: Everyone you meet has something valuable to teach you, so meet as many people as you can!
