It is known that during the Christmas holidays and this period of the year that people start spending a lot of money. Part of the reason why people do this is because Christmas is a time when you need to buy presents for your close friends and your family and the other part is because most prices during this holiday season drop considerably. Who doesn’t want to buy that brand new jacket for half of its original price?
However, not everything can go the ways we want, we can’t control everything. So, if you have had a couple of bigger expenses these past few months, you probably don’t feel very comfortable to spend hundreds of dollars on gifts and going shopping. This is completely understandable, but there is a way to get some money while you are enjoying your off-work days during the holiday season. Personal loans are the most viable choice in times like these, but with such a decision come quite a few responsibilities.
There are a couple of things you will have to keep in mind when taking up a new personal loan, and there are also a few red flags you will have to look out for when looking for the right place where you will use such services.
Source: Security Financial Management
Contents
How do they work?
Before deciding whether you need to borrow money or not and why you should get one, you should at least first understand how it works and the things you will have to do.
To keep it simple, a loan is a way to borrow a certain amount of money and they pay it back through monthly rates that depend on the number of months you choose and the interest of the company you are making the deal with. After the chosen time of loan payback, your deal with the company ends and your loan is completely paid off.
Do you really need the money right now?
One of the main deciders, when it comes down to getting a loan, is whether you really need the cash right at this moment. You can probably delay most of your bills or your next big purchase for the next month or two, so there might be no need to borrow money.
However, since we are talking about the Christmas season and the need for gifts and all the price cuts, this might be the perfect opportunity for a loan. If you wait too long to make the purchase, the prices will go back to normal and you won’t save up any money.
You should also consider that most companies that offer loans might have much better interest rates during this period of the year since it is Christmas after all.
In the end, it all depends on you and your situation whether you are really in need of such services or if you are just rushing things. According to PDLoans.com, it can be much cheaper and easier to get yourself a loan online instead of having to wait in line in person during the Christmas holidays.
Source: Deseret News
Will you be able to pay it back?
This is also a very important factor when considering whether it is time to borrow some money. It is not just about asking yourself whether you will have the money to give back the income rates back in time, but whether you will have enough to live your life normally or whether you will be able to get a nice vacation. These are some of the things you must think about before you finally decide that it is time for a loan.
Do some calculations and check whether you will be able to afford service. You don’t want to end up in a situation where you can’t even go out on a couple of drinks with your friends just because you gave up all your money on the monthly rates. The point is to make your life easier, not harder and resent the decisions you have made.
How long will it take to pay it back?
When you finally decide that it is time to get a loan, you will have the option to choose the number of months to pay it off. The shortest offer most services have is either 6 or 12 months while the longest payback offer can be longer than 80 months.
Sure, the rate for the 84 months offer sounds great and very low, but in the end, you will be paying a lot more than a shorter option. The more months you pick, the more money you end up spending. It is very crucial that you first consider all of the options on the table and so some calculations which one you believe is affordable. Make sure you do not forget about any surprising expenses that might happen in the future.
Source: Working Dads
What if I can’t pay it back?
One of the biggest reasons why a lot of people are scared of borrowing money from banks or other companies is because they don’t know what happens when you do not give the money back in time. The longer you delay the payments, the more your credit score will drop. While this might not be great if you plan on getting another loan in the future, it is not the end of the world. They will not be coming after you and taking your stuff or suing you. You will still have enough time to pay everything back, do not worry.
There are also some companies that will offer you a payment pause for a couple of months if you have lost your job. Just make sure you ask for the pause, to ensure that you have enough time to find a new job.
Is a credit card a better option?
Believe it or not, getting money in one lump sum is a lot easier to handle than having to deal with multiple credit cards. Not only you have to pay banks for constantly maintaining your accounts, but you also have to consider the different interest rates, your spending limits and so on. With a loan, everything is much simpler as you are working with cash.
