When you need cash yesterday to cover an urgent unexpected expense, you may feel tempted to rush through the borrowing process to get what you need ASAP. But this can cause you to make rash decisions that don’t fit your finances.
A slow and steady approach may help you make an informed decision. So, take a breather and ask yourself these five questions before applying for cash loans online. Answering them can help you find the best possible solution to your financial problem.
1. Can This Wait?
When you’re smack-dab in the middle of an emergency, everything seems like it’s a life-or-death decision. But if you look at your problem from another angle, you might see things aren’t as dire.
Suppose your oven breaks down. If you can work with a microwave and kettle, you might wait until you can afford to fix your oven rather than borrowing money to repair it right away. You may even save some money on your next utility bill by not using this major appliance!
2. Can You Lower Your Costs First?
You may not need to take out an online loan if you can reduce what you owe. Here are some ways you can lower your costs:
- Negotiate with your creditor for a financing plan
- Compare repair and service technicians to get the best price
- Use coupon and rebate apps to find sales on household items and appliances
- Buy generic brand medication
3.What is Your Credit Score?
If borrowing money is still the only option, it’s time to search out financial products. But before you can do that, you need to know your three-digit credit score.
Generally speaking, a higher credit score makes it easier to qualify for loans with reasonable rates and terms. A lower score may complicate this, but there are still options. Knowing where you land on this scale can help you narrow down on cash advances and lines of credit available to your credit profile.
4.Do You Want a Loan or Line of Credit?
A line of credit might be a good idea if you think you’ll need extra cash on a routine basis. As long as you’re responsible with credit and pay off your balance, you’ll be able to access your credit limit for as long as you keep your account open.
A cash loan has a finite shelf life. After receiving your funds upfront in one lump sum, you’ll have to repay what you owe by a specific date, at which point, your account will close.
5. How Much Will This Cost You?
The cost of borrowing is a crucial detail of your online loan or line of credit. Make sure you find out the total cost you’ll pay over the lifespan of your loan as well as the individual costs of your payments.
You’ll find this information in the loan’s APR (Annual Percentage Rate), and your lender should make it clear how this breaks down into each payment. Slot these payments into your monthly budget to confirm you can handle them in addition to your normal expenses.
Bottom Line
Borrowing money is a big decision—regardless of the financial product you choose and how much it costs. To make sure you make the right decision, answer the five questions above.