If you've never taken out cash loans, you may be interested in finding out more about them and whether or not they can be a suitable option for you. This can be an excellent financing option if your situation warrants it, but there are also some potential pitfalls that you need to be aware of before committing to a loan like this. Let's take a look at what the potential issues are and how you can successfully avoid them.
What To Look Out For With Cash Loans
While cash loans can be wonderful, helpful ways to manage your finances, or even your debt, not everything about them is quite as rosy, and if your situation is not just right, you may not be the best candidate for instant cash loans. Here are some of the things that you need to look out for when you take out cash loans.
You may enter a vicious circle
One of the most common and difficult problems people face when they get payday cash loans is that this may be the gateway to a financial vicious circle. You see, because the interest is so high on instant cash loans, and the repayment period is so short, by the time you pay off the first loan, you may end up needing another one immediately after. Or, even worse, you may need to take out a different loan in order to pay for the first one. This situation can go on forever if you don't find a way to increase your income and be able to pay the loan off without going into debt again.
You may end up paying more in interest than you originally borrowed
It's a well known fact that the interest rate on unsecured loans is very high, but when you make that an instant loan in cash, perhaps offered even with bad credit, that rate can be sky high. Depending on how large your loan is and how long you take to repay it, you may even end up paying more in interest charges than you got with the loan. It's hard to think of a situation where something like that is worth it, even with all the convenience an instant cash loan brings.
The money may not be enough
One thing you need to go going into this is that the actual amounts offered with loans like this are not very high and are rarely enough to cover your desired expense. That means that you may need to get another loan on top of this one in order to make the full amount you actually need. Obviously, that is not an ideal situation, and it puts you at risk of unaffordable debt. In addition, failing to repay these loans, or paying late or inconsistently can bring your credit rating down quite a bit, which will then affect your chances to get other loans, get approved for a mortgage, let a home, etc. You may want to look into the alternatives of cash loans for a more suitable option. Here are some suggested by the Money Advice Service.
Tools To Keep Track Of Your Loans
One issue that few people talk about is the difficulty borrowers often experience with managing their debt, and multiple loans, in general. When you have more than one payment to make, with different interest rates, and on different dates, it can be confusing and time-consuming to keep track of all of them. That's why debt tracking tools have been created, to help you manage your debt and payments more effortlessly and efficiently.
The method that comes in handy, and maybe naturally, to someone people, is to just keep track of what you owe and how much you've paid with the help of an Excel spreadsheet you create manually. You input the numbers (going in, going out, balance, etc.) and it can do the math for you automatically. This can be a good way to do it and it's certainly old-school, but trust me, there are better and more low-effort ways.
One step forward is to use a special website dedicated to these kinds of things. A site like this allows you to link all of your types of debt (student loans, secure and unsecured loans) so that you can have a streamlined overview of everything you owe, in different places.
Finance tracking apps
Finally, the most convenient way is to make use of a finance tracking app on your smartphone. The app does all the work for you and is able to clearly illustrate all aspects of your financial situation, including debt and repayments. The big advantage with this is that the technology is always at your fingertips, just in case you ever want to check something quickly or on the go.
Top Tips For A Positive Experience With Cash Loans
For a seamless experience with borrowing and repaying money with instant cash loans, here are a few important tips:
- Only get cash loans if you can afford the repayment instalments
- Check the interest rate and make sure you're comfortable with paying that amount
- Only borrow as much as you need, and not more
- Make sure you have a good method of debt management
- Check that you can cover your needs with just one loan
As you can see, there are multiple things to be careful about when it comes to borrowing money with cash loans. However, you can circumvent all of these problems by putting some smart tips into practice and taking the time to look into the PROs and CONs of cash loans to determine whether or not they are the best option for you.