When you’re struggling financially, it’s important to remain upbeat, and to remind yourself that your problems are not necessarily a sign of any failure on your part. Even the most sensible and careful among us can face the horrible reality of finding ourselves unable to meet our next bill, whether this is due to a sudden redundancy, a reduction in hours, or an emergency arising.
Rather than despairing if you find yourself in such a situation, you need to look for a solution, and you may find a short-term loan is the ideal financial instrument to help tide you over. Simple and easy to apply for through companies like Smart-Pig, they’ll ensure that you have money in your bank when you need it, allowing you a temporary respite to help get you back on your feet.
However, if you’re worrying about the long-term consequences on your financial health, here are a few points to put your mind at rest…
#1: Short-Term Loans Can Help You to Build a Positive Credit History
Although a lot of people remain ignorant of the specifics of applying for a mortgage, you’ll find that a positive credit record is essential if you’re ever in a position to start climbing the property ladder, and a short-term loan can actually stand you in good stead when it comes to making an application. Many people who approach mortgage providers are surprised to find that their credit rating is rather poor, simply because they’ve never borrowed before, so lenders don’t have a history to base their assessment on. A short-term loan can help you to build one, and provided that you make your repayments on time, it could come in very useful further down the line.
#2: You Won’t Suffer the Consequences of Failing to Cover Your Bills
You’ll also discover that taking out a short-term loan is often a better option than failing to meet your monthly payments. Should you choose to suffer without seeking help, you may find that your phone bill is cut off, your credit card repayment debts mount, or even that you lose your home because you can’t pay your rent or cover your mortgage. In these situations, the long-term consequences of not having money when you need it are far more severe than the fallout of borrowing from a loan provider.
#3: You Can Buy What You Need When You Need It
Of course, not everyone who borrows money from a short-term loan provider will be in dire straits. Some people approach lenders because they would prefer to buy something outright, as opposed to saving up for it for months on end. In truth, this is often a sensible long-term decision. Although you will be charged interest, it’s usually far handier to buy the car that you need so that you can commute to work, as opposed to catching buses every day whilst you save. Equally, many feel that it’s better in the long run to pay for the holiday they’ve been dreaming of, the refurbishments they’ve been yearning for, and so on, as opposed to living a life of frugality whilst they build up their budget. Their preference is to purchase what they want when they want, and pay it back in manageable instalments over a set period.
If you’re in need of a financial boost of your own, could a short-term loan be a viable option for you?
This is a great topic and your points are good ones.
My rule of thumb is that debt for increasing wealth is not a bad idea (a house, your business, etc.) Debt to decrease wealth (paying for day to day expenses or items that aren’t a necessity) is a problem. A car straddles the line. You may need a car to go to your job to make money, but it’s always better to save for your next car rather than always depend on a loan.
I also recommend securing debt only if you can pay it off, but it’s cheaper to borrow than to pay cash or short term to get through a short cash flow issue. If you have money in the bank/investments or the money is “on the way” it’s not a problem. If you use debt because you’re “behind” on payments, it will just push you further behind. You need to look at solving your spending problems first.