By being aware of the pros and cons of borrowing money, individuals may enter into short term lending responsibly and obtain loans advantageous to their personal or business needs.
Here are a few things you should and should not do when taking out long or short term loans:
- Do compare loan products and lending practices for the best money value
- Do choose a responsible lender and cost-savings loan product
- Don’t avoid loan product and lender comparison due to a lack of time
- Do understand all the terms and conditions of your loan agreement contract
- Do involve individuals who are affected by your borrowing decisions, such as a spouse
- Do borrow money for a specific purpose that enhances your prospects
- Don’t borrow money with the intent to save it
- Do borrow money amounts within your means to repay
- Do control money spending and meet loan repayments
- Don’t default on loan repayments
- Do obtain a loan without early repayment penalty
- Do repay a loan promptly to avoid interest accumulation
- Do maintain savings wherever possible
People who are considering taking out a short term loan can use these guidelines to help make smart financial decisions and avoid problems.
The pitfalls of not comparing loan products and providers, borrowing more than is affordable, and defaulting on loan repayments may cause excessive stress, reduce credit-worthiness, prevent future borrowing prospects, and limit spending or purchase power.