As citizens, we are continuing to borrow heavily amid growing prosperity and rising economic sentiment. So even though home lending dipped for the first time in six months in August, this is part of a normal seasonal trend that should not detract from the wider growth that has impacted on the market. A similar trend is prevalent in the consumer borrowing sector, where inflated rates of spending and stagnant earnings are driving the demand for credit.
A Guide to Responsible short-term Borrowing
It is crucial that you borrow responsibly as a consumer, especially when you entertain the notion of short-term loans. While this relatively flexible type of lending is particularly popular in the modern age, it is crucial that you enter this market with an informed and knowledgeable perspective. With this in mind, here is our guide to responsible, short-term borrowing: –
Understand the nature of the market
The short-term lending market is relatively diverse, from payday loan companies to firms that extend offers of credit to applicants who can provide a viable guarantor. The latter type of lending is particularly in vogue at the moment, primarily because market leaders such as TrustTwo offer higher sums of money at lower interest rates that can be repaid over periods from 12 months to five years if required. There is therefore more flexibility for borrowers, although it is important to understand the typical terms and conditions in context.
Compare the Market Extensively
While price comparison sites have made it relatively simple to compare prices and rates across multiple markets, there have been subtle changes that have altered the landscape for consumers. Firstly, customers have become lazy when appraising comparison sites, only checking one or two for the best deals. Market leading firms have also become increasingly unlikely to feature their rates on such websites, instead using their profile to drive customers to their branded site for information. It is therefore crucial that you compare the market in detail and extend your search to include visits to branded websites.
Budget for Repayments
Once you have identified a viable lender and explored their terms, it is important to determine whether or not the potential repayments can be sustained for the duration of the agreement. This is a time consuming but ultimately rewarding endeavour, and one that involves careful budgeting and the determination of your disposable monthly income levels. Then balance the proposed repayment rate (inclusive of interest) against your existing bills, as this will enable you to make an informed decision regarding the other and whether or not it is right for you.