Continually rising bills and general economic uncertainty make it necessary to seriously consider whether you really should or need to take out a loan. The main questions to ask yourself are:
- Do I need to make the purchase I need these funds for?
- Can I finance the purchase some other way?
- If I do take out a loan, can I afford to repay it?
Here are a few thoughts on each of these questions.
Do I need to make the purchase I need these funds for now?
This question should actually be divided into two separate questions, namely whether the item you wish to purchase is really necessary and whether you really need to make the purchase right now. If the item you wish to buy is not immediately necessary, it is recommended to give yourself a few days to think about it, as this often results in the realisation that you do not actually need or want it at all. If, on the other hand, the item is a necessity, but does not have to be bought immediately, you have several other options to consider:
- Can I wait until I can afford to make the purchase?
- Can I maybe get the item for free (like swapping it for something else or getting it from a recycling Website, for instance) or at a reduced price (by buying second hand or in a sale, for example)
You may also want to consider whether there are other ways of raising the funds for the item.
Can I finance the purchase some other way?
You could, for example, save up for the item you want. While this may take a little longer, it could potentially save you a lot of money in comparison to taking out a loan and getting the item now. You may, in fact, be better off in the long run, as saving up the required funds could:
- Earn you interest
- The price of the item may be reduced by the time you buy it
Another option is to use existing savings. Even though you may lose some interest by having to save again to restore the balance in your savings account, this option would ultimately still prove to be cheaper than borrowing money or using a credit card to make the purchase.
If I do take out a loan, can I afford to repay it?
This third question is perhaps the most important one of all. Borrowing money, regardless of whether it is for a short term only or for a prolonged period of time, will invariably increase your ultimate cost and it is imperative that you can afford to make the necessary repayments as and when due. If you cannot afford to make these payments, your debt will continue to increase due to rising interest and late payment charges. This could eventually lead you into ever more serious financial difficulties and bad credit ratings to go with it.
You can get expert advice on all loan related questions and more by calling Uncle Buck on Tel.: 01959 543 400 (Call charges may vary depending on your phone provider. Calls may be monitored for security and/or training purposes).
Call us now and let us help you decide whether you really need a short term loan right now or whether there are other, more suitable options available to you.