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Thursday, December 8, 2016

4 ways to avoid rushing in to a loan


Aggressive advertising encourages impulse borrowing
By Dan Radak

Loans are one of the most important business cornerstones that commercial financial institutions rely on. They want to attract as many people as possible to their special offers, because that’s the easiest way for them to make money. What’s more, many people just rush into taking a loan without any deeper thinking, due to aggressive advertising campaigns. So, here’s how you can prevent yourself from taking a loan you don’t really need.



Saving money as an alternative


The most frequent cause of opting for a loan is the wild desire to buy something on the spur of the moment. This is particularly the case in the pre-Christmas shopping season, when we’re under constant advertising raids. However, when you think about it for a moment, nothing has to be bought immediately, except for the food and the clothes. In addition, the rent and the bills could also be added to this list. All other items can wait. In line with that, when you notice a product you need, start saving money for it and buy it only when you’ve saved enough cash. To achieve that goal, you’ll need to improve your saving and spending discipline, which is why using a financial app is an extremely smart thing to do. Check some of the apps presented by Forbes and find the one that meets your needs.

Compare various lenders


Lenders compete with interest rates and special promotions
Every employed person has to have an account in a bank. Therefore, the most logical thing to do when you’re considering a loan is to inquire about the conditions in the bank whose client you already are. The advantage of such a way of thinking is that banks usually offer preferential interest rates to their long-term clients.

Nevertheless, sometimes you might get a better offer from other banks. For instance, when they launch promotional campaigns with low-rate loans, it could be a less expensive solution than a loan in your own bank. However, be careful, since your bank won’t approve of such a “betrayal”, which could lead to worse conditions for the services you might need from them in the future.

Clear your debts


No matter what institution you turn to for a loan, they’ll make an evaluation of your credit score. For that reason, first take care of your old debts, so that you can appear before your future lender with a clean slate.

Moreover, it would be smart to prioritize the previous debts. For instance, start with the most expensive ones or the ones that eat the largest chunk of your income. Also, you could use a few smart words from Clean Credit pundits when it comes to paying your old debt and regaining financial stability at the dawn of a new loan. Simply put, having a professional counselor by your side is always a practical solution when it comes to finances.

Look for friends & family solutions


People are often too proud to ask their friends and family members to lend them money. However, this attitude is wrong for a number of reasons. Firstly, why wouldn’t you ask someone you’re close to to help you out in a difficult situation? You would do the same thing for them, wouldn’t you? As a matter of fact, it’s flattering when someone trusts you enough to ask you for a loan.

Secondly, dodge wasting your income on high interest rates whenever you can. Still, even if you borrow money from a friend or a relative, suggest that this loan includes some sort of an interest rate, to preserve a business relationship. For instance, it could be activated if you miss the payback deadline. Such an agreement would keep you disciplined.

Finally, don’t mention your financial affairs in private conversations, especially in front of other family members or friends. It’s another way of separating the business and personal relationship with those people.

Unless it’s a matter of life and death, there’s no need for an urgent loan. So, never fall for call-to-action commercials or impulse buying. On the contrary, plan your budget carefully and if you really decide to take a loan, do it in accordance with our guidelines.


About the author: Dan Radak is a marketing professional with ten years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.

Images: Author owned and licensed