Trying to borrow money right now is a real challenge. There are so many lenders out there only looking to make a quick dollar off of absurdly high-interest rates rather than being a legitimate source of emergency funds for those in need. Obviously, that does not refer to all of them, but I do think it is reason enough to be cautious when we are seeking one out.
I find this is especially true when we are looking for a cash advance. There are many establishments that offer them, but who can we trust? I’ll be offering a bit of guidance on this topic for those of you curious, so be sure to keep reading.
Why we Might take out a Loan
Let us start here, as there seem to be a lot of misconceptions in regard to who borrows money and the purposes behind it. There is nothing inherently bad about it, though some people believe that. So, I will do my best to break down some of the motivations behind it.
As anyone who lives in the United States of America can tell you, student loans are one of the biggest things putting young people into debt in that country. It is unfair, and honestly kind of horrifying how many private lenders take advantage of the needs of very young adults who end up in debt for the rest of their lives because of it.
This is actually what got me interested in this topic in the first place. I remember researching private loans to try to cover the rest of my debts and found that so many of them are quite predatory. That is why I would recommend trying to find any other option for this specific need.
Large Life Events
Many of us have very specific ideas of what our dream wedding would be. From the venue to the wedding dress to the flowers – everything should be perfect for our special day. Sometimes, though, those up-front costs are just a bit out of budget.
What can we do in those situations? Well, this is when a loan or a cash advance can come in handy. Of course, I am not advocating for you to borrow out of your means, but if you are confident that you can repay it in a timely fashion, I see no reason to borrow and be able to plan an amazing event!
Now, weddings are not the only possible event to plan to use a cash advance for, and you can go to forbrukslån.no/beste-lån/ to learn more about if you want. Vacations are a fairly popular option and for good reason.
When you are planning to rent a vacation home, for example, the safety deposit might be quite expensive. Even if you have saved up for a long time before making the excursion, sometimes it can be too much on the spot. Something like one of these types of loans can be a big help in a situation like this, as they can provide the funds with few to zero strings attached.
Debt consolidation is a big “trend” for good reason. I add the quotations around trends because, in reality, it is something that people have done for quite a long time. When we consolidate, we are essentially buying out our past debts using funds freshly lent to us.
There are specific ones out there that are meant for this purpose, so consider looking for those. They might offer special benefits or reduced interest rates if that is what you use the loan for. So, that is why I recommend you seek them out – any time that we can find lower interest rates, it is good news for us.
Raising Our Credit Score
At first, this one definitely seems confusing. I mean, how can we improve our score by taking out more money? Well, a large part of this comes down to the fact that one of the best ways to improve our scores is to pay our bills on time.
How does this help? Well, the key is to borrow very small amounts and then pay them back incrementally (an explanation, do not pay it all off at once). An example of this might be borrowing approximately three hundred dollars, and then paying it off gradually for thirty dollars a month. Of course, there are other ways to go about this, but it is a fairly tried and true method.
Just be cautious. Do not borrow too much money, as that can have the opposite effect on your credit score. Borrowing too much at once can be a red flag for many lenders, and they may be hesitant to lend to you either again or at all if you are applying somewhere new.
Any small business owner reading is probably quite familiar with how expensive running one can really be. There are so many hidden costs and fees that we would not even think of when planning to create one. They creep up on us and sometimes spring up suddenly when we are already in a bit of a bind.
This is another situation in which a cash advance or a loan can be of assistance. Again, not for borrowing willy-nilly, but for situations in which we need to buy more inventory or pay wages, but we do not immediately have those funds available. That being said, do your best to borrow responsibly, even in this area.
Why Loans are not Inherently Bad
It is all too easy to write them off as a bit of a bad word. That especially applies to debt – many people view it quite negatively, which is certainly fair. However, I do think we need to keep in mind that is it not inherently terrible to be in debt. Rather, it is a sign that you are working to improve your current standing and that you honor what you owe.
When we flip the conversation like that, it becomes easier to speak on this topic productively rather than with harmful assumptions. Someone owing money does not reflect on their values or their personality, so we should not view it as such. That is part of the reason I want to unpack the stigma in the first place.
Still, there are times when we should look at lenders critically. I am sure you have heard of loan sharks, at least at some point. While some might be inclined to write them off as non-existent, unfortunately, they are very real.
They trap unsuspecting borrowers into contracts that are incredibly far from fair. The repayment terms are absurd, and the interest rates are very high. Why is this a bad thing? Well, it comes down to what interest means.
Interest Rates – they Matter More than We Realize
If you walk away from this article having learned anything, I hope it is this. When we are agreeing to a contract with a lender, it is incredibly critical to examine the rate they are offering you. It is influenced by several qualifying factors.
The first is out of our control – it is inflation. Depending on the rate of inflation in the country that the lender is in, rates may be higher or lower. Obviously, that is something to consider in our examinations.
What about the others, though? Well, this is where that credit score that I talked about earlier really comes into play. Your score will have a huge influence on what kinds of rates we see on the loans we are offered. The higher the score, the more likely you are to get a good deal. This is because creditors will see you as someone that they can trust to pay back the money.
This matters because the level of interest will impact how much you end up paying back on the money that you borrow. You see, you will always end up paying more than the principal amount due to this. However, you can minimize the extra money going out of pocket by improving your credit score and spending habits overall.
Thankfully, the process of taking out a loan is not overly complex. Find a broker at a local financial institution or online and do your research. Apply with the necessary documentation and you are well on your way! Just remember to borrow responsibly!