If you have found yourself in a pinch, short term loans can actually help you out. Many advise against loans, but what should a person do in an emergency? If you do not overdo it, you can manage small loans and keep your debts under control.
Help in Emergency Situations
Generally, when a person applies for a loan, they are in a bind. These can include needing to make car repairs, fix home appliances, or pay for medical expenses. These are valid reasons to take a small loan and help avoid further complications.
Avoid Late Fee’s
Most accounts have some type of late fee associated with it. It can be a credit card, utility payment, auto payments, or your rent. However, taking a small loan may have a lower interest rate than your late fee. It is also better than having a bounced check from your checking account.
Some creditors will make payment arrangements with you. If you do not have the funds in your account, you are of course hesitant of doing so. However, if you feel confident in a lending source, you can ask them to grant you an additional day. They may waive the late fee for you and set you up on a payment plan. Then take only the loan necessary to pay your first installment.
Avoid Increase in Interest Rates
If you are late in your payments or go over your credit line with credit card companies, many will increase your introductory interest rate. This increases your minimum monthly payment into something you cannot afford. A small loan may give you an additional monthly payment, but you will soon pay that off and be back to normal. If your interest rate increases on a credit card, you are likely stuck with that rate forever.
Place You on the Road to Financial Recovery
Without small loans, you can find yourself deriving from your plans. That could be taking a family vacation or your plan to become debt free. It is hard for some people to realize that a loan can help you become debt free though.
Consider having multiple credit cards with high interest rates. A small loan could pay the entire balance of those cards. Your monthly payments could be lower due to the decreased interest rate. If you pay the same amount you were on all the credit cards, you will pay your debt off sooner