A Borrower’s Guide to Short-Term Loans October 20, 2015Featured, My MoneyOff

Short term loans often get a bad rap. While there are certainly some scams going on out there that consumers should be aware of, a lot of the times the complaints you read about could be avoided. In many instances, consumers fail to follow necessary processes and practice responsible borrowing, which gets them into more debt than they can handle. By properly educating yourself before taking out a loan, you can avoid the negative outcome.

When to Take Out a Loan

One of the first suggestions is learning when you should take out a loan. Since short term loans are generally required to be paid back within a 14 -30 day period, it is probably a good idea that you only take out a loan when you need it and can afford to pay it back. Some suggestions on when you might use a loan include:

·  Unexpected emergency (car repair or household repair)

·  Unexpected bill

·  You need to purchase something that can’t wait until your next pay

Finding the Right Company

If you determine that you do need to take out a short term loan you’re going to need to find the right lending provider to apply with. It is important that you don’t just apply to the first company you see as you should complete a bit of research first. Some things you can check out to determine if a company is reputable or not would include the following:

Company website: By checking out the company website you can get information on how long they’ve been in business and even check out customer testimonials. A reputable company will have an easy to use website complete with several options for contact.

Social Media: Social media is becoming a popular means for connecting with service providers and consumers. If you are interested in taking out a loan from a particular company, looking on their Twitter or Facebook accounts could give you an idea of how their customers feel about them. For instance, if you were interested in Blue Trust Loans you might check out Blue Trust reviews on their Twitter page.

Consumer Complaint Sites: Aside from reviews you can also look to complaint boards to see if there are customers who had issues with a particular company.

Managing and Paying Back Your Loan

Once you’ve been approved for your loan you’ll need to learn how to effectively manage it and pay it back in a timely fashion. This is another common area where borrowers make mistakes. Here are some suggestions to managing and paying back your loan timely:

·  Sign all documents and return them timely to the loan provider

·  Check your bank account to ensure that you’ve received the correct loan amount

·  Use only the funds you need to handle your financial issue

·  Try to pay the full amount on the due date

·  At least pay the minimum loan extension fee if you can’t pay it all at once

·  Request a paid in full letter after you’ve paid the loan balance for your records

Being Smart

Borrowing money from a short term loan provider does not have to be a bad thing as long as you’re a smart borrower. Below are some additional tips to consider:

·  Only take what you can afford to repay

·  Always read the loan terms and agreement including fine print and disclosures

·  Communicate with the service provider if something comes up

·  Try as best you can to pay it back on time as this creates the least amount of out of pocket expense.

Don’t let overhype of borrowing from a short term loan provider keep you from getting the funds you need.  Though saving money and budgeting are the first solutions for getting out of a bind, there are times when short term loans are beneficial in taking care of the problem. By educating yourself on the short term loan process, learning how to effectively manage and pay back the loan and being a smart borrower, you can have a positive experience. What’s also great is that by following all the above mentioned tips, you’ve now secured a positive relationship with a service provider who can help you out of a jam in the future.

Photo by EM Prize | Shutterstock
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