Hidden dangers of quick loans & how to avoid them

You have probably come across an ad for fast loans on TV, on a website, or in a newspaper, which has been very popular with the citizens lately. What is the point of the existence of this type of financing of the citizens when there are already banks that offer this type of service with favorable interest rates? The growing interest in fast credits is because citizens do not have enough funds to meet their basic needs, and their monthly income is not enough to be able to cover the costs of food, bills, housing, and the like. There is almost no person who at some point in his life has not applied for a loan in a bank or financial company that offers fast finances. That is why the number of these financial companies is increasing daily. Who are fast loans for? The target group of fast credit is creditworthy citizens, i.e. have a regular and good monthly income. Why do people apply for fast loans when banks have them available? Unlike banks with these money companies, you have the opportunity to submit a request for a certain amount of cash, and the time for approving the request is shorter. And people opt for this type of financing because they need money as soon as possible for some unforeseen expenses, personal needs, or repayment of another debt and the like.

As good as this fast funding method is, it can also be bad for you on the other hand, as it has some hidden negative features that you may not notice before applying. In the next section, we will talk a little more about what you need to pay more attention to when taking out a quick money loan and how to protect yourself.

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The first and most important thing when applying for a quick credit is to read it in full, letter by letter, the agreement they give you to sign. You should pay special attention to the part where the conditions for its return are stated, such as the interest rate, the deadline by which you have to pay it in full, or some additional costs if any are stated in the contract. If you have any doubts, ask for an additional explanation before signing anything. If there is a part of the contract that is written in a smaller font, which is very important in these contracts, try to read it two or three times if necessary so that you can understand it and there is nothing vague.

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For example, if your short-term loan agreement is for one year, and you want and have the means to pay it back before the time stated in the contract for the credit, you should keep in mind that there are additional costs for early repayments. For short-term loans that have a fixed interest rate, an additional fee is charged for their early repayment. Many companies will not point you to this fact to extract more money from you and make a profit.
You are applying for a quick loan from a financial company that has not received a state license to operate in that industry. Unlicensed lenders tend to charge high-interest rates, and if there is any legal problem you will not be able to protect yourself. Therefore, before contacting and applying for a loan in such a company, check if they have a license to work in this business.

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As mentioned earlier, analyze the contract in detail, some companies have a habit of charging additional hidden costs or fees. You are probably wondering what those hidden costs might be. Fee for late payment, fee for applying for a quick loan, overdraft fee, and so on. Therefore, it would be safest for you to investigate or inquire with a professional about such costs and whether they can be avoided so that you do not pay extra money for them.

With quick loans, you can easily fall into the so-called debt trap. What does this mean? You have borrowed a certain amount of money, if you do not have the financial means to repay the loan, the company that lent you the money to delay your payment period will charge you additional fees. Over time, if you do not repay the loan and the deadline is extended all the time, the additional costs will increase all the time and you will be trapped. So if you think you will not be able to get your money back on time, ask for a loan from a close friend or family member, ask for an advance from an employer. This way would be a cheaper and better option than getting stuck in a debt trap. If you need money for a short period prestamer 300 euros loan can be used. All you have to do is apply online on their website and you will be contacted in a minute.

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High-interest rates. Just like with regular banks, institutions that lend fast short-term loans charge a monthly interest rate, which is quite high compared to that of banks. Each financial company has its policy for determining the amount of this interest rate. The cost of repaying the loan would be some 30 percent of the loan amount and would range to some 300-400 percent, depending on the financial company. There is no way to regulate these costs.
There are many downsides to borrowing money, whether it is borrowing from acquaintances, banks, or financial institutions that offer quick loans. If we need money quickly for an unexpected expense, medical treatment, car repair, monthly bills, or personal need if we choose the latter way, we need to be very careful. Pay special attention to hidden costs, because these companies are extremely usurious. This type of financing is subject to a lot of risks and hidden dangers, so think carefully before applying for one. The best option would be if instead of applying for a quick loan, you first turn to your closest friends or your family who would surely help you in this type of situation.

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