Lending is not a new concept; it has been into existence from the ancient period. The existence of direct lenders is much older than banks and other recognised financial institutions. However, the lending system has refined over the time.
Back in the day, borrowers would get money only by securing an asset against the loan, but online lenders provide unsecured loans too. Yet, guaranteed payday loans direct lenders no credit check have brought flexibility in the lending system, you need to stick by particular rules.
Do not live beyond your own means
As a smart borrower, you should not owe more than your repayment capacity. Failure to reimburse money results in late payment fees and additional interest, which entraps you into a permanent debt spiral. Remember that interest is additional burden on your finances. While deciding your repayment capacity, you must consider interest payment along with capital.
Contact several online lenders to compare their deals. This will help you grab the affordable deal as well as knowing additional expenditure on top of your day-to-day operations. Add up these expenses and deduct from your monthly salary to know the remaining balance. Make sure you set aside at least 10% of your salary as emergency cushion in case an emergency pops up in the meanwhile.
Ensure regular payments
Whether you have used your credit card or you have taken out a debt, timely payments are a must. Credit cards allow you to repay your bills within the grace period. You should settle your dues within that period to avoid penalty and interest. Short-term debts require you to pay off whole of the amount at once and therefore they are a bit difficult to manage. On the contrary, long-term debts are easier to manage because of fixed instalments.
In case of short-term loan, the amount will be deducted automatically from your account on the due date. Meeting day-to-day expenses may be difficult unless you receive your next pay cheque.Make sure that you do not dissipate your money in unwanted things. Do not spend money in shopping sprees, theatres, cinemas, and clubs. Otherwise, you will end up with taking out a new loan to meet these expenses and this cycle will continue to build up. For long-term debts, you should set aside your instalment as immediately as you receive your salary.
Do not borrow to invest
Borrowing money for investment is not a good idea. Interest on bonds and fixed deposits will not be enough to pay off your debt.If you try to invest in equity, you can get higher interests but they are extremely volatile. If the market goes down, you will not only suffer from huge losses. Instead, you should use money in fixed income generating sources, however, they will be long term projects.
First, approach your friends and family
As long as you do not need a large amount of funds, you should seek financial help from your friends and family. If you have a good relationship, they will not deny you lending money. Make sure that you keep your promise. If you fail to pay off on time, it will deteriorate your relationship. Further, you will never be able to ask for monetary help in future. One of the significant advantages of borrowing funds from them is you do not need to pay interest. Turn to online lenders for short-term loans only when everybody of your acquaintance denies lending you money.
Keep your spouse in loop about the loan
If you want to apply for a loan, discuss it with your spouse. This is vital because the debt will cause burden on your all expenses. Keeping your family in loop about the loan will not only help in reducing overall expenses. Your spouse may have some spare money. Chances are you do not need to take out a loan.
The bottom line
Whether you need a loan for a small or a big need, you must ensure your repayment capacity. Taking out a loan is far easier than paying it off. If you do not want to be entrapped into debt, analyse your affordability. Do not rely too much on borrowing. Instead, put aside money as much as you can. The more money you set aside, the lower the chances you apply for the loan.