The government, banks and individuals all borrow money. If they weren’t able to obtain credit, then the wheels of commerce would come to a grinding halt. One of the first things that anyone who wishes to borrow should do is to carry out some calculations.
Basic sums before you get a loan
If you’re considering taking out a loan write down a list of all your household essential expenses as well as income, including state benefits that you receive. If you need the loan for something that’s absolutely vital, then you have to work out that you can afford the loan repayments. Not repaying a loan on time can lead to financial distress and possible penalties. Click here for more information. You should understand that a loan of any type shouldn’t be considered if the repayments are going to put extra stress on your finances.
Key facts to take into consideration
Banks, credit card companies and payday loan companies all include interest and transaction charges as part of the eventual repayment total. When you are thinking about a loan you should always include these additional costs in your final calculations. If you can’t see the costs marked clearly on a website then telephone the company in question and ask them to tell you. The Guardian website has a wide range of tools, ranging from debt consolidation to mortgage costs so you can be aware of the precise costs of your credit.
The cost of a payday loan
This type of credit is expensive. When you first go online to apply for a loan, you’ll be asked whether you can afford the loan, you’ll also be asked about your monthly income and whether you have a bank account. The whole process is quick, but these loans are expensive. Remember, the companies want your custom and appreciate that you have approached them because they are quicker at granting the short-term loan than a high street bank. If you don’t have a very good credit record, they can still accept you. You will be charged a transaction fee and a high interest rate. If you borrow £100, for 30 days you’ll be charged $5.50 for the service you’ll end up repaying a total of $137.15 as a result of the interest charges.
Expensive penalties if you can’t repay
If you can’t repay a bank loan or a credit card company on time you can usually contact these companies and come to some type of arrangement. With a payday loan company they will keep on trying to take the money from your account, remember you’ll have given them permission to do this through a Continuous Payment Authority. Even though new legislation only allows the loan companies to try to collect their outstanding sum twice in any one month, you will still be charged for this service. The Daily Mail has highlighted the dangers of this type of credit. If you want to keep your loan costs in check always carry out strict calculations, and see if you can’t cut some household costs instead of taking out a loan.