Thinking to apply for a small cash loan for answering any economical crisis or to avail funds for any other purpose? Here are 5 mistakes you must avoid when applying for a payday loan, with tips about how to use the loan amount for getting through financial events.
- Taking out more money than needed
Do not borrow more than what is needed. For example, if you want to pay off bills with a small cash loan, then calculate exact billing costs. Apply for a loan amounting to that specific cash required only. Some of you may want to borrow a little more just to feel secured that in case another emergency arises, the additional money will help out.
However, the interest rate is based on the amount borrowed, so if you are asking for a larger loan, then the repayment amount would be more as well.
- Applying for Loan when you can’t repay
An instant cash loan will be provided to you, only when the lender is sure that you can repay. Your monthly income and other debts being paid will say the most about your repayment capacity. If you think that there are many debts to pay already, and you would not be able to repay a new loan then do considering borrowing money. Look for other financing alternatives, such as selling off an asset, getting cash against a security etc.
- Overspending than you should When on a Loan
So you have received the fast cash loan, and can relax to pay for any economic dues. Now that the financial burden has been lifted for which you borrowed money, what do you do? Go ahead with spending lavishly? Or take into account all expenses wisely? The latter would be true, as you still have to pay for the small cash loan taken, along with making sure you do not get into other debt traps.
- Using Payday Loan for Other Purpose than Intended
You may have taken small cash loans for a purpose, but eventually you used the money for some other activity, which was not an immediate priority. Remember, any delays in resolving debts or financial emergencies can land you up in rough waters. So, utilize the speed cash loan wisely, and for the intended purpose it was asked for, until the newer event holds a greater priority than the former, to be managed the first.
- Defaulting at Repayment Continuously
Not only for small cash loans, but you must try never to default at repayments for any type of loan. If you do not pay back for the loan amount in time, then it can spell badly for your CIBIL score, and deter your chances of getting future loans approved. If you feel that you are unable to repay at times, then get in touch with the lender instantly, and work out a loan restructuring plan. If the loan plan cannot be altered, then try getting help for securing finances, and repaying the loan as per the loan agreement.