Big trouble can arise from small loans when you overlook the risks involved. If you’re not careful, such borrowing activity can backfire, and lead to debt that spirals out of control.
Here are 5 commonly used wrong approaches for handling small loans that borrowers inevitably regret:
Failing to Plan Ahead
The key to making payday loans work is to have a repayment plan already in mind before even applying for a loan. Without a plan to pay off the loan quickly, you can set yourself on the quick path to debt.
Rushing to Get Cash
Even though smaller loans are supposed to be repaid faster than conventional loans, sometimes consumers assume the terms aren’t as serious. So they simply rush out to take the first loan they find without thinking much about the terms.
Only Checking Local Lenders
At one time, location heavily influenced the establishments consumers did business with, whether they were good or bad companies. But the internet has changed the nature of how people shop for items, so there’s no reason to choose a lender just because they’re located in your neighborhood. It’s better to make a list of choices then pick the best deal.
Relying on Basic Keyword Searches
While the internet is a powerful consumer tool, you should remember its limitations. Google doesn’t always deliver the best search results based on keywords. Sometimes it takes hours online to find what you’re really looking for once you’ve entered the niche phrase that corresponds with the best lender for your situation. You can save time by using a web tool or site designed to compare loan services.
Failing to Read the Fine Print
If you don’t read the fine print of a contract you will be bound to unknown consequences. Any offer that sounds good might have a catch in the “special terms.” A promotion, for example, might have attractive upfront features for a limited time before less desirable terms kick in. The interest rate might skyrocket after a certain period of time if the loan is not paid off quickly.
Related Post: 5 Payday Loan Mistakes That Will Cost You in the Future