It’s an easy quick fix when you find yourself in a bind. Or when you really want that new vehicle down at the dealership. Most of the time you can have the money the same day you ask for it. In this day and age of instant gratification there’s nothing like home with your new item. But the time when it comes to start paying on that loan when the newness of the item wears off can be less than gratifying. Or in the case when your rent is yet again due and you have the loan to pay off as well, not so nice. It feels as if you have fallen into an abyss never to return to normalcy. In essence you paid your bill but have another one to pay off, you haven’t eliminated the issue, but made a new one. There are several different kinds of loans to choose from when taking out a loan, but if you don’t do it right, they can hurt your finances in more ways than one.
What kinds of loans can I choose from?
There are a number of loans to choose from when contemplating taking out a loan. Be sure to choose the one that suits your needs best.
- Student loans- these loans are for college students to help them pay for schooling.
- Mortgages- these ofcourse help families to buy a home.
- Auto loans- to help buy a vehicle.
- Personal loans- these can be used for a number of things, no specification is needed.
- Payday loan-these work a little differently. These are smaller loans that require the customer to have a payroll so the customer can come in and pay them back on their next pay day, hence the title, pay pay loans.
How can I take out a loan without hurting my finances?
Now that we have looked at the types of loans you have to choose from lets discuss how you need to take care of it so this big decision doesn’t hurt your finances.
1. Pay on time.
Every payment, all of your bills. One of the most common things people do when they get a loan that hurts their finances is being late on the payments. Even if it’s a couple days past due the bank does notice. Specifically with payday loans these need to be paid on time, and if you don’t it doesn’t ever seem like you can get ahead. Because your going in to pay off a loan, you end up taking ot another loan to pay off another bill. Keep up on your other bills so you have the money to pay off these other bills.
2. Make sure you can pay it off.
This is perhaps the most feared yet the most common way loans can hurt your fincances. You take out a loan not having any sort of plan yourself as to how to pay it off, set up a payment plan that doesnt suit your needs at all then end up with sky high payments because you wanted to oay it off sooner and the only way to do that was to arrage to make ridiculously high payments that are well beyond your reach. Make sure when you set up your payment plan it works with what you make.
3. Be Consistent.
When you take out a loan generally it means you don’t have the money pay for the object in the first place. With that being said you need to consistently keep track of where all your money is going and when. You need to be obsessive with your check book. If yiu get behind on even just one bill that can have a domino effect on the rest of your finances. If you dont want to hurt your finances and end up in the abyss we discussed previously, you absulutley need to leave zero room for error.
4. Extra bills.
Before you take out a loan consider your bills for a second. Can you afford this extra bill? Will it hurt your finances further? Take some time to sit down and calculate all of your bills, figuring in the extra bill you will have. Can you afford it. If not then maybe you should wait for a couple of years to take this loan out. Or if your in a bind and really need the extra cash c maybe trying to eliminate costs you don’t need so you can afford this. Is McDonalds every morning really a necessity? Maybe cable t.v. really isn’t all that important. Just make sure you make room for an extra bill so month.
5. How’s your credit?
Another way this could hurt your finances is it could make your credit score go down if you don’t pay it. But, if you do keep on paying it it could potentially bring it up. But first how is your credit? Is it good? Or not so good. I’d take a look at your credit score before looking into getting a loan from the bank, if it’s not so good, consider your options to bring it up. One way or another, be smart about getting a loan.