Are you buying an engagement ring or looking for a new car? Any kind of high paying necessity can tempt you into getting cash loans. Not many people have thousands of dollars laying around just waiting to be spent on custom made rings and brand new vehicles. However, if you are considering getting a cash loan, then there are a few things that you should keep in mind before you do.
Interest rates are a tricky thing.
Cash loans carry with them an incredibly high interest rate. You loan officer will go through the contract step by step but they tend to skim over the interest rate side of things. Getting quick cash comes with consequences. Another thing regarding interest rates; most of your monthly payment goes towards the interest and the rest towards the principal. So, if you are only making the minimum payments every month, you’re going to end up spending a lot more in interest charges. Your best bet is to find a cash loans place that does not have an early pay off penalty so that you can pay the loan off as soon as you can and avoid all the interest, if possible.
It never goes according to plan.
When you’re thinking about cash loans, you tend to think in best case scenarios. You’ll eat ramen noodles for three months and not spend a penny and have your four year loan paid off in those three months. However, things come up; your car breaks down, you get hungry, you have a flood at home. When these things happen, you end up paying the minimum on your loan because you aren’t required to pay anymore and you need that money for other things. It’s understandable and it’s the right thing to do. However, if you’re going to consider a cash loan, then you need to think of things as worst case scenario instead of best. The best case scenario rarely happens.
It affects your credit.
This can be a good thing and a bad thing. While the initial check will ding your credit, making your payments on time every month can give your credit the boost that it needs. However, if you don’t make your payments regularly because you can’t or you forget or whatever reason, that will also be reported to your credit. So, if you know without a shadow of a doubt that you can afford the monthly payments, then a loan is not a bad idea because it will help to build your credit as well meeting whatever the need is that you have. However, if you are only hoping for the best case scenario in order to afford even the minimum payments, getting a cash loan is a very unwise decision.
It can give you what you need.
The great thing about a cash loan, is that it can get you what you need fast. If you live in a city that doesn’t have great public transportation and your car breaks down and you have no money to buy a new one, you’ll need a car. Getting a cash loan can allow you to get a car so that you can keep your job. Or maybe you had that flood that was mentioned earlier and your homeowner’s insurance isn’t going to cover everything. You can’t just let the moisture seep into your floors and walls; a cash loan could be the answer you need. However, you probably shouldn’t just get one because you want to buy some fun thing. You’ll end up regretting it. A necessity however, is different; you do what you gotta do.
There are good things and bad things about getting a cash loan. They are helpful and the great thing is that almost anyone can get one of varying amounts. However, they can hang over your head for a long time if you do not pay them off and end up being more of a burden than a help. Many people get cash loans because they just want to buy some fancy thing and then end up regretting the following years that they have to pay for a moment of impulse shopping. Make sure you weight out the positives and negatives clearly before you get started.