Do You Need To Get A Personal Loan?
There are plenty of legitimate reasons for needing or wanting a personal loan - a new vehicle
, a college education, a medical crisis and so forth. There are times, however, when a personal loan is a bad alternative to other payment and preparedness options. We'll look at some of those options, but keep in mind that should you decide a personal loan is imperative avoid a short term loan if at all possible.
The disadvantage of a short term loan is, first and foremost, that you need it. If you are in need of a short term loan that means you have no savings to fall back on for an immediate emergency. Those of us who struggle to live paycheck to paycheck often think we're budgeted tightly but going to be okay. The problem is that all too often we've forgotten one creditor, failed to figure in things like amusement and new clothes, and never consider emergencies. The fact is that emergencies typically happen several times a year. We head off to the dentist for a cleaning and are told we have gum problems and need that deep cleaning that costs $600. Our car breaks down. The water heater springs a lead. These things happen. Ideally, a short term personal loan is not where you will head to resolve these crises. What you want to do is have savings set aside for these emergences and head to the bank for a personal loan only for big ticket items well in advance of the event or need.
Financial planners always recommend that you set aside enough money to pay all living expenses for three to six months in case of a crisis. While this may not be practical for all, it is a goal that we should aim for.
If, however, you don't have the money you need to get you through the crisis and you must have the money now, head to the bank or the mortgage company. Don't head to the payday loan or title loan company. The fees are exorbitant for either and, of course, the latter risks your transportation to and from work. Once the crisis is over, and you've secured the personal loan, you might benefit from credit of financial counseling to help you get on the road to a steady payment into an emergency savings fund.
Before you apply for a personal loan, think about your spending habits. Ask yourself if they are compulsive. The U.S. National Consumer Council says that for 10 percent of Americans the answer is a resounding yes. Ask yourself these questions: "Am I clear about my finances? Do I know my bank balances, my monthly expenses and the interest rates I'm paying on any personal loan or to any creditor? Am I using one credit card to pay the balance on another? Do I enjoy spending money?
If the need is great and you must have the money, think first of the options to a personal loan. Might you get an advance on your pay, or might your employer actually lend it to you with no interest? Might you take on some extra work? Taking a night time job waiting table will give you tip money from the very first night you work. Can you sell something? Most community newspapers now offer free classified ads for private individuals when they're selling small ticket items. Or you can put something up on online auction site. Get creative about solving your financial problems. There are many interest-free options to taking out a personal loan.
by: James Copper
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