What are the 3 most common mistakes we make when looking to borrow a small amount of money?
Many people enter the UK finance market looking to improve their financial situation, only to find that they ultimately have exactly the opposite effect.
Sadly, there are a whole host of common mistakes people make but to help ensure that you don’t make a bad situation worse, avoiding the following 3 mistakes will get you on the right track.
1. Failing to Shop Around
Many people are so concerned that black marks on their financial record will exclude them from borrowing money that they mistakenly accept the first offer the comes their way! This is NEVER a good idea though.
The only way we can accurately assess whether we are getting a good deal or not is to find something to compare it to.
Payday loans are by some distance the highest profile entry to the UK financial market currently available. A barrage of publicity and easy access often leads people to believe they are the best option. It is only when you take the time to shop around that you will see that there are a number of equally attainable options available which are significantly cheaper.
Shopping Around has Never Been Easier
Websites such as our own ensure that shopping around has never been easier. We allow you to submit a single application to a number of reputable lenders resulting in the receipt of a variety of no obligation offers.
2. Failing to do your Homework
Have you taken the time to read about the agreement that you will be signing? Do you understand what will happen if you miss a payment? Can you repay it earlier than scheduled without incurring a charge?
Signing up for any form of credit is a serious commitment and should certainly be treated as such. Once the lender has your signature, the agreement will be legally binding and you should not complete anything until you understand everything there is to know.
For further information relating to the future impact of some types of finance, please check out the BBC article:
Payday loan ‘risk to new mortgages’
3. Borrowing more than you need
It is all too easy to add a little extra onto the amount that you would like to borrow but this will inevitably lead to repayments being higher than they need to be.
If after working everything out you find that you need £1000 to repair your car, only to find that you actually have access to £1200, don’t apply for the larger amount. Stick to the amount that you originally worked out.
Unnecessary debt is often classed as ‘bad debt’. To explore the theory behind bad debt in greater detail please check out the following Money Advice Service article:
Good debt versus bad debt