Decision Time: Do You Need A Loan?

Finance is one of the most important things in any person’s life. Whether it’s your monthly expenditures or your income, money makes the world go round, and each and every one of us feels that keenly each time we receive a paycheck or spend a large amount of cash. Keeping a close eye on your finances is incredibly important; the last thing you want is to suddenly realise you’re struggling for money, having previously thought you were OK for the month.

If that does happen, though, you’ll want to enact a contingency plan, and fast. Perhaps you’ve got some savings that you can dip into, or a family member who’s in a better position than you and can afford to send some extra money your way to help out. If you find yourself alone and worried about your money, though, there is another option: you could take out a loan.

Piggy Bank Saving Money

The concept of loans barely needs explaining, but here’s a quick refresher. Loans are given by banks or private companies, and they’re effectively amounts of money decided upon by both parties which need to be given back over time. The concept of loans is ancient; we know that both Ancient Greece and Ancient Rome had banks and temple lenders who gave out money to the public with the promise that it would be paid back.

Loans, then, are as old as the hills, so they’re obviously a solid way to grab a little extra money when you’re hurting for it. It can be difficult to know when you’re in a position to apply for a loan and when you’re not, though; there are many reasons to apply for a loan, but just as many reasons why you might not want to, especially given that there are several different types of loan.

Loan Application Form

Let’s start with our example earlier. You’re struggling for money, and you’re not sure you’re going to be able to make rent this month or pay your bills. In this instance, it might be a solid idea to, for example, find a payday loan lender you can trust and apply for a payday loan. Payday loans are basically small injections of cash which have fairly high interest rates, as the lender expects you’ll pay it back within a very short space of time. Despite what you might have heard, payday loans are (in concept) a perfectly safe and solid way to grab a little extra money for yourself before your paycheck comes in. You just need to make sure your lender is legitimate and friendly before you apply.

The difficulties arise when you’re in such serious financial straits that you won’t be able to afford to pay the loan back. When this happens, you’ll not only find yourself in the same financial trench that you were in before applying for the loan, but you’ll now also have a lender asking you to make payments that you can’t make. Many lenders are extremely amenable to negotations around when you can make payments (which is why it’s so important to find a trustworthy lender), but you don’t want to dig a deeper hole than you started off with.

With that in mind, then, the best time to apply for a loan is when you’re hurting for cash in the long- or short-term, but you know that there’s a windfall coming which will allow you to make your payments in a timely and regular fashion. Applying for a loan when you know you can’t pay it back will just lead to trouble, but if you’re struggling just a little before a new job, for example, then a loan could be the perfect way to just tide yourself over.

There are many reasons as you might want to raise extra capital, including if you are a sole trader of finance trader. For example, Forex does not require a deposit, as can be seen here –, but as you begin to trade, there might come a time when you take the decision to raise additional capital. The same applies to sole traders, you might wish to invest in additional tools or products to help assist with your business practices.

Of course, you don’t need to be financially struggling to apply for a loan. Both secured and unsecured loans can be excellent ways to finance a DIY project, for example; you could apply for a loan to pay for a planned extension, or to renovate the interiors of your home. Secured loans are secured against your house, so do bear that in mind if you decide to go ahead and apply for one; unsecured loans have no collateral assets, but they won’t be for quite as much money, so you need to know how much you need to borrow and what the timescale will be for paying it back before you make the decision.

There are times when a loan is not appropriate for you. If you’re looking to borrow a relatively small amount, and you don’t desperately need it for the immediate future, then you might be better off applying for a credit card rather than a loan. This is because the interest rates on loans can be a lot higher than those on credit cards, so if you’re just looking to spend here and there, you’re better off with a credit card than a loan. Nevertheless, loans can be a great way both to help yourself out of financial difficulties and to create a more satisfying home or property for yourself.

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