How to get an Affordable Unsecured Loan
Unsecured lending products often get an unfairly bad rap, both from the press and from borrowers who have had negative experiences with unscrupulous providers. Relying on these sources, you might conclude all cash advances come with prohibitive finance charges, but you would be incorrect. In the vast majority of paycheck borrowing "horror stories," the problems actually resulted from the misguided choices of the borrower, not the lender. In many ways, how much borrowing quick cash costs you is up to you. Make sure you budget wisely and efficiently by following the five tips below.
Five Must-Know Tips for Online Cash Advance Borrowers
- Borrow just enough to meet your immediate budget needs. Over-borrowing can lead you into serious fiscal hot water because of the costly interest charges associated with unnecessarily large principal balances. Payday funds were never intended to provide large amounts of cash for discretionary expenses. Rather, they are designed primarily to meet small, short-term, and urgent financial needs. Figure out exactly what you need to make ends meet until your next paycheck and then borrow no more than that amount.
- Ask your lender exactly what your finance charges will be. Before you agree to anything with your lender, make sure you know the exact amount of interest you will be paying on the amount you wish to borrow. Lenders are required to express this as an APR, or annual percentage rate, and some companies also express it as a portion of funds borrowed (e.g., $15 for every $100 borrowed). Make sure you will be able to afford to repay both the principal and all the interest expenses.
- Use these products judiciously. As mentioned before, short-term lending solutions are intended to be used sparingly and only in times of true need. For example, taking out an advance on your paycheck to keep your electricity turned on would be a wise choice. On the other hand, borrowing such funds to help pay for a mini-vacation would be a poor financial decision.
- Avoid extending terms at all costs. Depending on your provider, you might have the option to extend the term of your loan, or prolong the due date, for additional finance charges. Lenders typically refer to this as rolling the loan over. The problem is, if you don't have the money to repay your lender on the due date, you're probably still not going to have it on your new due date, particularly since you will have racked up additional interest expenses. Do whatever you can to repay the funds on time.
- Budget to ensure adequate funds are in your account on your due date. You'll need to allocate your funds appropriately in order to have a sufficient balance in your checking account when your balance comes due. If you don't have enough money in the account on the due date and you have not informed your lender, you will end up buried in penalty, overdraft, interest, and other fees. If you've done everything you can but still can't come up with the money, talk to your lender before the repayment date to work out a possible alternative arrangement.