MonthJanuary 2020

Avoid these pitfalls when taking out a consumer loan

 

Remember to compare consumer loans before choosing to borrow money. Avoid these pitfalls when applying for consumer loans.

Many people want to take out consumer loans to finance various activities or goods. This can be anything from covering the last thing you need to buying a new boat, to borrowing money to refurbish the bathroom.

No matter what you want to spend your money on, there are some things you should avoid when choosing to take out a consumer loan. We have compiled a brief overview of what you can do to avoid these traps.

Compare loans

Compare loans

When applying for a consumer loan, you should not take the first consumer loan that you are offered. When you apply for a loan, you will not know the final loan terms until you have received an offer.

Therefore, it is usually worthwhile to apply for at least three different consumer loans and compare the different offers you get. This way, you can take out the consumer loan that offers the most favorable loan terms. For example, you can use our search engine to compare different consumer loans.

Go over the terms

Go over the terms

Make sure you know the terms that come with the consumer loan you want to take out. It is especially important that you know the interest terms that apply to your consumer loan, as well as what repayment plan you have to deal with. This way you know how much the consumer loan will cost you each month.

Also, make sure there are no hidden fees on your consumer loan, which may come as a nasty surprise at a later date.

Never borrow more than you can afford

Never borrow more than you can afford

This is probably the most important trap you should avoid – make sure you never borrow more money than what you can actually afford to pay back. If you are in a pinch, it can often be tempting to take out a consumer loan to cover your daily expenses, but keep in mind that you will only end up in an even bigger pinch if you are unable to repay the money.

Consumer loans can often come with high interest rates, and you can end up in a debt crisis if you are unable to follow your repayment plan. In order to avoid borrowing more money than you can afford, it is important to find out how much money you can afford to borrow before applying for a loan, and that you do not spend the consumer loan on things other than what was the plan in the first place.

See if you can use other methods to borrow money

See if you can use other methods to borrow money

Do you want to take out a consumer loan to cover an unexpected expense? Then it might be worthwhile to use a credit card instead, since a credit card allows you to borrow money free of interest for about 45 days, depending on your bank.

If you know that you will receive money into your account during this period, then you will be able to save interest expenses by using a credit card compared to taking out a consumer loan. However, be aware that you should pay your credit card bill at maturity to avoid any hefty interest expense.

Should You Use Consumer Loans For Refinancing?

Many want to take out a consumer loan to refinance debt received through small loans or credit cards, or to refinance an earlier consumer loan.

Many want to take out a consumer loan to refinance debt received through small loans or credit cards, or to refinance an earlier consumer loan. If you are heading into a debt trap, it may sometimes be worthwhile to use consumer loans for refinancing.

If the consumer loan is to be used to avoid a debt crisis, it is important that you start the process as early as possible before you accumulate even more debt.

It may also be worthwhile occasionally checking to see if you can get better interest rates on your consumer loan, thus using a day-to-day consumer loan to refinance an old consumer loan.

How to use consumer loans for refinancing

How to use consumer loans for refinancing

If you have accumulated debt through the use of credit cards and small loans, the interest rates on these loans will be sky high. In such situations, you should compare different consumer loans and see which loan would be best suited to repay this debt. This way you will be able to get debt-free faster than if you had to repay the debt without borrowing extra money.

Another situation is if you have already taken out a consumer loan where you pay high interest rates. There may be various reasons why you have been offered a poor offer with high interest rates, such as low income. If you today have a higher income than when you took out the consumer loan, you will probably be able to get a better deal today.

To be able to get a consumer loan for refinancing, you must first start by comparing different loans. You can do this using a search engine, where you fill in your criteria, and quickly and easily get an overview of which loan is best for you.

If you want to use a consumer loan to refinance a previous consumer loan, it may often be worthwhile to first consult with your current bank if they want to offer you better terms. If not, pay for other offers.

Remember to be out early

Remember to be out early

If you want to use consumer loans for refinancing, it is important that you are out early so that you do not receive payment notes. This will make it more difficult to get a new loan. If the bank can see that you have been able to repay high-interest debt that you have accrued through the use of credit cards or small loans, you will generally be able to obtain a consumer loan to repay this debt.

Applying for consumer loans for refinancing is done in the same way as when applying for a regular consumer loan. To see an overview of which loans are best for your personal finances, you can use our search engine to make a quick and easy comparison.

Beware of loans from private individuals can be dangerous

Loans from private individuals often pose major problems, it is better to avoid them.

When you buy electronics you want to know as much as possible about its manufacturer and parameters, as well as read user reviews. Before you decide to marry, you want to know the details of your partner. And when it comes to a loan? The key is not only the data on it, but above all on who actually provides it. It is also true that you can come across quite often with private individuals.

 

Online advertising is definitely not recommended at all

Online advertising is definitely not recommended at all

Short and austere information that offers tens of thousands of loans and contact phone. Such an offer is already quite misleading, because you know basically nothing about the provider. It is not clear about the total interest that you should know before any personal meeting. At other times, you can also meet a fraudster who only collects a few cartoons and then mysteriously disappears. You will lose a few hundred, but sometimes a few thousand, too – so beware where you actually borrow! Advertising in the press without any personal data is undoubtedly very risky.

 

What should we be very careful about?

private loans

The offers of individual insolvent providers are similar literally to egg eggs. The texts are full of grammatical errors and are often just bare sentences. Very often, the provider does not even provide his identification number, so it is virtually untraceable in domestic Internet waters. Nor does it provide information on its headquarters (or residence), it really only gives the phone, or even the region in which it operates. Draft contract by email for study in advance? Do not expect anything like this at all, while proven entities should act with all obvious. For example, in the real estate sphere it is almost a necessity. Isn’t there a better proven company after all?

 

Loan advertising must be of a high standard

Loan advertising must be of a high standard

No promises, no promissory notes. When it comes to advertising loans, there must be a certain level that cannot be discounted. How do you know a provider that is fair and very likely to be reliable? There are a few simple clues, for example.

  • Headquarters at a specific (and of course representative) address, very often in Prague.
  • Well-designed website where you can easily find all the essentials of the loan.
  • No advance fees! A few hundreds in advance does not even amount to a transparent act.
  • There is a lot of information about the history of the business. Independent reviews, quality online calculator.

So, to sum up, a loan without a register in the non-banking sector will definitely be a better option than a bet on an unknown person you don’t even know his name about, do you? If you do not find a company to lend you, there is certainly a clear reason in the current legislation. In the bank you have to prove your creditworthiness, in the non-banking sector you need at least some employment. You probably can’t afford a loan and it would be a mistake to fall into the snares of private users or people who force you to sign a bill for a large sum. Then you easily lose your home or a substantial part of your property, basically with a single signature.

 

You can borrow easily, just by mobile

You can borrow easily, just by mobile

In modern times, a loan agreement is extremely easy to make. SMS loan is available day and night, every weekend or holiday. Just whenever you remember, the administration associated with it is always a matter of minutes. Why then bother to meet a person you do not know and discuss with them about tens of thousands of dollars? After all, there is no point in such behavior; there are other – and safer – paths of life.

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