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When should you avoid quick loans?
There are some important benefits to be gained from getting access to instant cash, as long as you find a recognised and approved lending source. That includes being able to rely on an immediate loan to help you with an emergency purchase, major repair or serious cash flow problem.
However, there are also good reasons to avoid quick loans. These are times and situations when this method of raising money is not appropriate, or advisable.
Much depends on your personal circumstances of course, and the reasons you may need a quick loan.
In a nutshell, instant short term loans can be invaluable when you know you can pay them back in manageable monthly amounts, in the next few months.
In that case, you can get a quick loan for all sorts of purposes – such as home repairs, buying a major appliance, tackling issues with your car or even as a way to meet urgent bills. The money can be in your account in minutes when you use a credible lender, and then you settle your loan gradually from your regular income.
For some people – in various financial situations – this sort of lending is not a good idea. In fact, instant credit can make your problems worse!
So, let’s look in detail at when you should avoid quick loan deals.
Short term lending perils
Finding quick loans can seem like a great way to handle a pressing money problem, but they are not a long term solution if you are already in debt. Or, if your source of income may dry up in the near future.
If your cash issues look like they are here to stay – or likely to get worse – opting for an instant loan can be like putting a sticking plaster on a leaking pipe. It may stop the problem briefly, but money will continue to leak out, and your debts could leave you drowning!
This can be particularly true if you take out a payday loan – which is instant cash that you pay back over a short period. Okay, so you get money in your account in minutes, but how confident are you that you can meet the monthly repayments?
When you get your wage and find out that all your money is needed for rent, food and other essentials, you could find yourself with not enough cash to meet your loan commitment.
So, that’s when your money management problem just gets worse! As now you have a new outgoing that you cant meet.
Keep in mind too, that quick loans tend to be available with a slightly higher interest rate than longer term loans. You are paying for the convenience of having money quickly and on a short term basis.
Longer term lending spreads your repayments out more and is often at a lower rate of interest. For some people, therefore, patiently applying for a personal loan over a few years could make your monthly commitment far more practical and achievable.
There are also great online lending deals for long term payments, which you can access via the Cobra payday loans website.
Can you have more than one quick loan?
This is another pitfall of instant short term credit. You can take out a quick loan with relative ease, and many instant short term loans are available even when you have a poor credit history.
With the money in your bank in minutes, it can be a big sense of relief.
Then, when you start to struggle again, it’s tempting to once again find quick loan solutions.
Having multiple credit arrangements is generally a bad idea and it’s when you should avoid quick loans. It can be complex to juggle your repayments, meeting all the deadlines and keeping track of what you owe. It can be the start of a very slippery slope.
That’s why it is recommended quick loans are only used occasionally; when you need instant cash that you can pay back in months.
Alternatives to quick loans
As it is possible to get instant short term loans with a low credit rating, another danger is to think they are the only way to get cash quickly.
There are in fact a number of ways to tackle an immediate cash shortfall.
We’ve already discussed the wisdom of finding long term loan products online to keep repayments small and more manageable.
You might also want to consider borrowing some money from friends and family to dig yourself out of a hole. Clearly, when you need cash fast, they could help you with little or no expectation of interest on the loan or speedy repayment.
If that’s not an option for you, another alternative to a quick loan is using a credit card. You can spend up to your limit, and make the minimum payments each month to your credit card provider, to free up cash quickly.
This is another financing solution that’s short term though, especially as the interest charged on credit card lending can be steep.
Another occasion when you should avoid quick loans would be when an existing lender is willing to be flexible. For example, adding to your mortgage or increasing a current loan. This could be a more affordable alternative to quick, short term lending.
Money management tips, avoiding quick loans
Many people find it hard to survive on their household income these days and are living on a financial knife edge. One unexpected additional cost – like a broken appliance or larger than normal bill – can tip them over the edge. This is when a quick loan can be a great stopgap.
However, one time you should avoid quick loans is if you can tighten up on your budgeting day to day instead.
It’s highly recommended that even when you are safely in control of our incoming and outgoing cash, you find ways to economise. Then, put even small amounts aside for a rainy day! Having this cushion of cash to fall back on is a wonderful way to avoid quick loan applications.
It all hinges on good planning and being alert to what you spend. Living within your means starts from being clear exactly how much cash you have each month, and what your priorities are.
Once you’ve assigned your incoming cash to bills like rent, electricity, gas and food, you can then be careful with what’s left, buying treats when available money allows.
Don’t get tempted to impulse buy items that don’t fit into your money plan. The price of that ‘bargain’ or ‘must-have’ item could be unpaid bills or no cash for essentials later in the month.
Keep in mind that there are times in the year when you need to think ahead and budget for extra money to spend. Especially Christmas and birthdays, but also to cover childcare or outings in the summer school holidays for example.
The other side of the coin is spending with no plan or awareness, then being puzzled each month when you’re in the red and struggling to pay bills!
It may sound boring making a budget and sticking to it. However, the peace of mind can be wonderful, as can the successful way you avoid the need for quick loans.
How can you live better, on a tight budget?
Does being really careful with your cash to avoid quick loans sound like a tough challenge? As part of your money planning, give some thought to ways you can cut costs, but still enjoy life.
Some good examples would be taking family fun outdoors – so you can don’t have multiple rooms using electricity. Or, cooking as a couple or a family, rather than opting for takeaways or meals out.
Could you switch to cheaper food brands, walk instead of using petrol or public transport, or invest in home fitness equipment so you can cancel expensive gym fees. Can the thermostat on your heating and your wash cycle temperature go down a notch? It all adds to cost savings.
Shopping around for cheaper utility companies or insurance policies can also be a great way to save money. Then, of course, you can achieve energy savings – and cut bills – by turning lights off, not having electrical equipment on standby, running washing machines only when full, and not using dishwashers and tumble dryers. All little things that could add up to having more cash to spend.
Make a list for your big shop too, based on a clear meal plan, to stop supermarket bills running away with you.
Take a cold hard look at your other outgoings too. It’s shocking how many people are paying subscriptions for online services, film channels, magazines and all sorts of things they rarely use. Or, they are paying for phone contracts that long since expired!
You can certainly avoid quick loans if you focus on finding ways you accidentally waste cash!
How to earn more
Another way to dodge the need to find instant cash loans is to make sure you always earn more than you spend.
This is another great money idea linked to thinking ahead and making a plan. If you know your household expenses are going up – or you might need cash for a new car or appliance for example – find ways to grow your income.
For instance, turn your hobby into a money-making method, restoring furniture, gardening, mending cars, creating artwork or baking cakes for cash.
Or, look for another part-time job that fits around your existing work schedule. Can your current employer give you more hours, even if it means taking on a new role in the same company, such as cleaning after hours or standing in for absent staff?
There can be an added benefit if you avoid quick loans this way. It will also become a great way to have more money to spend on luxuries and to save for a holiday.
Making money from your home
The biggest drain on your money – and therefore the main reason for needing instant short term loans – is your home. Household expenses are going up far too fast, and wages don’t always keep pace.
One method for avoiding quick loans is to find a way to make some cash from your property.
This could be renting out a spare room – on Airbnb for example or to a student. Or, many UK locations offer the opportunity to rent out your garage or driveway for parking.
It’s important to note that any cash you get from either of the last two ideas must be accounted for officially. You can get into serious trouble for undeclared income especially if you are entitled to benefits.
Also, if you rent out a room or parking space, make sure you have clear agreement from your landlord, or that your mortgage provider allows such money-making projects.
When is a quick loan okay?
If you have looked at all the above ideas and options, there are going to be times when a quick loan is a good solution.
This is especially true if a shortfall in your available cash could leave your family miserable, hungry or unable to carry out simple everyday tasks like travelling to work or washing clothes.
There are times when getting some outside advice with money management can make your life easier and avoid debt situations.
However, sometimes getting an instant short term loan takes the pressure off you just long enough to put everything back into place and get you back on track with monthly outgoings.
However, even when getting cash fast is a wise move, you still need to avoid quick loans with unapproved lenders!
Taking out payday loans or instant credit deals with some companies can mean high-interest rates and crippling repayment terms. Your dream solution can become a financial nightmare.
Making sure you find the right quick loan for you is important too, as there are different providers and terms for instant cash lending.
That’s why Cobra payday loans provides a handy way to search for quick loans online. We match you to validated lenders, under a lending service provided by an FCA authorised credit broker.