What To Consider Before Taking Out a Short-term Loan

If you feel like you are at the end of your rope financially and you don’t know where you are going to find enough money to pay all your bills and still eat, then one of your solutions might be taking out a short-term loan. Before you sign for your loan, though, there are five things you should consider: your need, your finances, your lender, your terms, and your payments.

Short-term Loan

Your Need

Your first consideration is your need. Make sure you know exactly what you need the money for before you borrow. This may seem rather silly, but sometimes people panic and think they are in more serious financial straits than they really are. Write up a list of all your current bills, including what you owe and when you owe it. You might discover that you have a bit of wiggle room. Also, consider if your “need” is really just a “want” and can be put off until a later date. You may not have to purchase that new piece of clothing or television right away.

Your Finances

Along with considering your needs, you must also look closely at your current finances. Using a budget worksheet, list your current income and expenses, and see how they match up. Be honest with yourself as you look over your expenses, and determine if you can make any cuts that might free up your money for more immediate demands. Check, for instance, if you really need all the channels in your cable package or all the features on your cell phone. You may be able to put a little money back into your budget.

Your Lender

If you decide to go ahead with a short-term loan, make sure you work with a reputable lender. Research possible lenders online, paying close attention to their serves, professional ratings and customer reviews. The latter is especially important. Search several review sites, as in MaxLend reviews, and read both positive and negative reviews and any responses or explanations from the lender. When you have narrowed your search to a couple of likely candidates, contact the lenders for more information, and then determine which one best fits your needs.

Your Terms

Before you sign on your loan, you must fully understand your terms. Read all the fine print, and ask questions if necessary. Know exactly what your interest rate will be, how much time you have to pay the loan back and the purpose and amount of any fees. Jot down this information and other important details on a single sheet of paper that you keep handy at all times. You don’t want any surprises.

Your Payments

Finally, you must know exactly what your monthly payments will be for your loan so you can work them into your budget. This is something you should do before you sign any loan paperwork. You will want to carefully consider if you can afford your payments and what you might have to cut to do so. Then you can fully determine if a short-term loan is right for you.

There may be times when a short-term loan will meet your needs well, but be sure to do all your homework before you sign on the dotted line.

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