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Here Are The Top Debt Myths Debunked

Here Are The Top Debt Myths Debunked

There are many debt myths today that stop people from getting the best out of loans. It’s important to discover what is true about debt to avoid being part of the problem. The 1st step to getting the best out of debt is debunking the most common myths. Below are the top 5 debt myths debunked.

1. Debt is bad

There is this general notion globally that debt is bad so, it must be avoided. This is far from the truth. Many people have been led to think debt is bad because of the consequences faced by people who are unable to service debt. Debt isn’t bad if you can meet your repayment obligations. If you can take and repay a payday loan in time, there is nothing wrong with that. In fact, debt is a good thing in such an instance because you get access to money for taking care of emergency expenses. Debt is also useful when you have a solid plan. You shouldn’t take a loan just because it is available to you. Have a good reason first as well as a solid plan for repaying the loan. You should also understand the type of debt you are taking. Many people don’t pay attention to the terms and conditions of loans, so they end up branding loans negatively. Debt is good as long as you have good reasons for taking up debt and a solid repayment plan.

2. Debt is for the poor

People also associate debt with the poor although many rich people have made a fortune because of taking up debt. Loans are for everyone regardless of your social class. The only difference is the type of loans the rich take. Most rich people take up long term loans for investment purposes. The poor tend to take short term loans for subsistence purposes. You can take a payday loan or any other type of short-term loan to cater for unexpected expenses. So, applying for a loan doesn’t mean you are poor. In fact, your chances of succeeding using your own savings are very slim. Everyone, including the rich, take up loans. The difference is in the type of loans they take as well as what they do with the money.

3. Your credit history/score is better off when you avoid debt

Many people also believe that they can keep their credit score and overall history intact by avoiding debt. This is far from the truth. In fact, you hurt your credit history by avoiding debt since there is nothing to report about. As the name suggests, credit reports record your credit history. If you don’t take up loans, such as credit card debt, payday loans etc., your credit report won’t have any entries. A person’s credit score improves when they show they are capable of meeting their debt obligations. This simply means you have to take up debt. Otherwise, your credit score won’t change for the better.

4. Debt terms and conditions are set in stone

Most people are also of the notion that debt terms and conditions can’t change. This is far from the truth. Lending institutions are usually flexible. However, you have to put in work to get better terms. For instance, you need to be a regular customer to be able to negotiate for better terms. You also require a good credit score and solid assets. Being knowledgeable also helps. Your chances of getting the best possible debt terms and conditions are slim if you have basic borrower information. You need to invest in financial education to be able to negotiate on the next level. Most people believe loan terms and conditions don’t change because they don’t push their lenders hard enough. Lenders also tend to be less flexible on short term loans. Considering most people take short term loans, it’s easy to understand why people believe this myth.

5. Debt settlement is unethical

Lenders love portraying debt settlement as an unethical practice that portrays lack of character. This isn’t the case. Of course, there are people who take up loans and use them irresponsibly. However, most of the people who turn to debt resettlement do so because of circumstances beyond their control such as unemployment, emergency bills, family problems, etc. For this reason, there is no problem with seeking this alternative when you don’t have any other option.

Summary

There’s a lot of misinformation surrounding debt today. To get the best out of loans, you need to understand the myths surrounding debt. Although there are countless myths about debt, the above myths offer valuable basic information.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
What Are The Best And Worst Ways To Use A Loan?

What Are The Best And Worst Ways To Use A Loan?

It’s always advisable to live within your budget, stay away from debt, etc.. However, there are some cases when it’s justifiable to take on debt. Sometimes it’s inevitable to take debt. When you have an emergency expense for instance (such as an unexpected medical or car repair bill), you may be forced to take a payday loan or any other type of short-term loan. It’s a bad idea to take up a loan if you don’t really need one. With that said, let’s get into more detail on the best as well as the worst ways of using a loan.

Best ways of using a loan

1. Starting a business:

It’s highly recommendable to take a loan and start a business. Business loans make the most sense because they are put into one of the most productive loan uses. Provided you prepare a solid business, it’s always a great idea to use your loan to start a business.

2. Debt consolidation:

You can also take a loan to help you manage your debt better. Managing debt can be stressing when you have many loans. Debt consolidation allows you to clear off multiple debts so that you remain with one manageable loan. If your loans have gotten out of hand, it’s a good idea to consolidate as long as you still have the capacity to service the resulting debt.

3. To build your credit score:

You can also take a loan to build your credit score. If you have a bad credit score that needs to be improved fast, taking a loan is a good idea. The benefits of having a good credit score are enormous. As long as you can repay your loan in time, there is nothing wrong with building your credit score by taking loans and repaying them in time. This tip works perfectly with credit card loans/debt.

4. To cater for emergency expenses:

As mentioned above, you can take a loan to cater for emergency expenses. Medical bills, car repair bills, roof repair bills among other kinds of bills may arise when you don’t have money. In such cases, you can take a payday loan among other types of short term loans to cater for those emergencies.

Worst ways of using a loan

Let’s turn to what you shouldn’t do with loan money. Ideally, you shouldn’t take in debt to spend on unnecessary expenses. Although the definition of ”unnecessary” expenses can vary from one person to another, here’s what you need to know.

1. Never take a loan for gambling:

Gambling is very risky. The odds are usually against you. There is nothing wrong with gambling with your own money if you really want to gamble. However, it is not advisable to get into debt because of gambling. In fact, you should avoid taking loans to engage in any activities whose outcome can’t be controlled.

2. Funding luxuries:

You should also avoid loans if you are taking them to fund luxuries i.e. buy the latest furniture, electronics, go for a holiday, buy a second home, buy new clothes/shoes. Most people get into debt because of taking loans to enjoy lifestyles they can’t afford. To avoid this mistake, fund luxuries using your own money. You can take a loan if you already have the money to fund luxuries. For instance, you may be waiting to get paid. Unless you are in such a scenario, avoid debt by all means. If you can’t afford something at any given movement, save up and get it later. You should, however, consider putting your money into better use i.e. funding income generating ventures such as a business.

3. Paying everyday bills:

It’s also a bad idea to get into debt every month to pay rent, energy bills, grocery bills, etc. You can take a payday loan once in a while to sort out expenses when you have some financial difficulties. However, it’s not a good idea to pay for everyday bills with debt. If you find yourself doing this, it’s time to adjust your lifestyle to match your income. It is possible to avoid short-term loans by living within your means and building a savings account.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
The FCA ''killed'' Payday Loans But What Has Come After Appears To Be Just As Bad For Borrowers

The FCA ”killed” Payday Loans But What Has Come After Appears To Be Just As Bad For Borrowers

Many people in Britain applauded when the FCA (Financial Conduct Authority) put an end to Wonga-style payday loans back in 2015. Fast forward two years later, the applause is over. In fact, fear has set in over whether the FCA’s payday loan assault has resulted in a new uncontrollable headache for borrowers.

The FCA has gone as far as launching an investigation on the impact of the payday loan cap on borrowers. There is evidence from numerous industry sources (debt charities and industry groups) suggesting that there is an increasing number of people who have been completely locked out of the credit markets or have been forced to turn to high-cost loans.
According to Jane Tully, Director of External Affairs at Money Advice Trust, it is possible to ”regulate away” supply but you can’t ”regulate away” demand. Simply put, the FCA’s actions only dealt with the supply of payday loans (payday loan lenders) but didn’t think about the effects on borrowers.

According to Tully, payday loan problems have been displaced. There are many people today who are accessing many other forms of high-cost credit because they have no option. Such people have a higher chance of falling into debt now more than ever.

Although the FCA payday loan cap was designed solely to tighten lending practices as well as protect borrowers, the cap has had negative effects such as killing the supply of payday loans. This has, in turn, left many people with fewer suitable short term loan options.

Before the cap, the payday loan industry had two main industry players namely; Wonga, and Dollar Financial. These dominant payday loan lenders are in the process of being forced out of the payday loan lending business.

Wonga’s revenues dropped by a record 64% in 2016. Dollar Financial has already closed hundreds of Money Shop stores and put their payday loan business up for sale.

According to the CFA (Consumer Finance Association) C.E.O., Russell Hamblin-Boone, the payday loan industry markets to a higher demographic, however, this has attracted some unforeseen consequences. The CFA represents twelve of the biggest payday loan lenders in the UK.

According to recent consultations carried out by the FCA, there is a sharp increase in the number of UK citizens missing their utility bill payments in the past two years.
According to debt charity; StepChange which focuses on individuals facing financial distress, over 40% of all its clients miss one or more bill payments every month. StepChange has also discovered that 34% of all individuals who are denied payday loans turn to other types of short-term credit.

According to StepChange’s policy adviser, Laura Rodrigues, those people who miss bill payments state that they don’t have adequate money to cater for all their major expenses. Rodrigues also recognises the fact that there is a gap in the market that has been created by the FCA cap. There are few suitable alternative forms of short-term credit which exposes possible FCA social policy issues.

According to the Consumer Finance Association, approximately 600,000 people struggle to get short-term loans in the UK as payday lenders continue exiting the market. The apparent squeeze on short-term credit supply has also forced people to fall into the hands of unscrupulous lenders now more than ever before.

Individuals who have been shut out from accessing short-term loans because of the tighter affordability checks have been forced to turn to high-cost credit products such as logbook loans, unauthorised overdrafts, guarantor loans, etc., which aren’t price capped or haven’t undergone serious regulatory scrutiny. According to the FSCP Chairman, Sue Lewis, the same protections applying to high-cost short term loans should apply to all other types of credit.

Although influential groups like the Financial Services Consumer Panel (FSCP) which advice the FCA have requested the government to regulate these types of loans the way payday loans are regulated, nothing has been done so far. The FCA, however, plans to lay out a post-cap policy this summer.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Saving Money vs. Taking Out Loans

Saving Money vs. Taking Out Loans

It is always advisable to build an emergency fund by saving a portion of your income every month. An emergency fund is always handy when you incur unexpected expenses such as; medical bills and car repair bills. You can’t afford to put such expenses on hold. If you don’t have savings, you will be forced to take out short-term loans such as payday loans to cater for the expenses. Saving money has always made sense. There are however exceptions. Below is a discussion to help you make an informed decision if you are torn apart between saving and taking loans.

Saving money is highly recommended

You should always strive to save a portion of your income every month whether you have loans or not. Developing a saving culture is important because there will always be something that you can buy with excess money. Furthermore, life is full of eventualities. You can fall sick, get involved in a car accident, lose your job, etc. When any of these eventualities happen, you need to have an emergency fund to cushion you before you get back on your feet. In such cases, you may not be able to qualify for a loan. Your savings will be your last resort. Having substantial savings also gives you that much-needed peace of mind. Many people suffer from financial stress because of living from hand to mouth. You need to save to avoid unnecessary stress when you incur unforeseen expenses.

When is taking loans better than saving money?

When you have a business idea that requires a substantial amount of money, it may be better to take a loan than to try and save up money. Taking loans for investment purposes is advisable. It can take you decades to save up enough money to start your business. Furthermore, most business opportunities don’t remain viable for long. You will almost always lose out if you save up to start a business. Savings can only take you so far if you don’t have a substantial income. There is nothing wrong with taking a business loan provided you have done your research. You should also make sure you get favorable loan terms.

Short term loans like payday loans are also ideal when you don’t have access to your savings. If you have a locked your savings in a savings account, you may not have immediate access to your money in case of an emergency. Payday loans come in handy in such cases. The loans are available instantly at reasonable interest rates if you borrow from a reputable payday loan lender or use a licensed broker like Swift Money. Payday loans are also easier to access. You can apply online. Some savings accounts aren’t accessible online. In cases where you don’t have the luxury of time, it’s always better to take out a payday loan or other types of short term loans instead of waiting to save up.

Saving and taking loans

There is nothing wrong with saving and taking loans at the same time. As long as you qualify for a loan and you have a good reason for taking the loan, you can save while you take up new loans. You should stop taking up new loans if you will have problems repaying them. However, don’t forget the benefits of taking up loans. For instance, you are bound to boost your credit score by taking up new loans provided you service them as required. Savings don’t offer such benefits.

Should you start saving after you are debt-free?

Although it is better to start saving when you are debt-free, in most cases, it may take too long for you to start saving if you focus on clearing all your debts first. Some debt i.e. home loans take more than a decade to clear. Home loans can take less time if you channel your savings to repaying the loan. However, it’s not advisable to do so if you don’t have a substantial emergency fund. Your priority should be setting up an emergency fund. Once you have done that, you clear your debt and then go back to building your savings account.

Furthermore, it may make more financial sense to service debt than repay it as soon as possible. Most lenders charge fees for early repayment making it better to continue servicing debt. You may also be getting a loan at a very good rate.

Summary

When it comes to saving vs. taking loans, it’s a matter of perspective and scenario. It is prudent to save in most cases. In other cases, however, it may be better to take loans. In a nutshell, it is up to you to analyse your current situation to be able to make an informed decisions.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
What Are Bridging Loans?

What Are Bridging Loans?

Bridging loans are short term loans extended to individuals who have to pay their debt soon but haven’t had access to their main line of credit yet. Bridging loans ‘bridge’ the gap that exists when you have pressing cash needs that must be attended to immediately but you still have to wait for your main line of credit to become available.

Bridging loans are popular in real estate investments. They resemble payday loans but in a real estate context. The loans usually facilitate property purchases that wouldn’t normally be possible. In today’s world of downsizing and upgrading homes, the chances of finding your next home before you clear your current mortgage loan is very high. In such a case, a bridging loan will be perfect for you.

Bridging loans are short term loans like payday loans. However, they are larger. The loans are also high-interest. Bridging loans are typically meant to help you buy new property while you are waiting to sell/receive proceeds from the sale of existing property. The loans are also used to help individuals planning to sell their property/home quickly after renovating. Bridging loans are also ideal for individuals planning to buy property at an auction.

How do bridging loans work?

The loan amount you receive is usually dictated by the equity you have in your existing property. Interest is usually calculated on a short term basis i.e. on the term of the loan which is usually less than a year. Your credit rating or credit score is also considered when calculating interest. Banks also consider other normal lending criteria. Borrowers are expected to make their repayments normally until the property in question is sold. Bridging loans also attract new property purchase costs such as legal fees and stamp duty.

When are bridging loans good for you?

Bridging loans are great options for property investments that require large sums of money in a short time. In such instances, traditional forms of financing aren’t suitable because they take too long to process. Banks take long to process mortgage loan applications. In cases where you need to buy property from an auction, it might not be possible to secure financing in time if you apply for a typical mortgage loan.
Some borrowers also use bridging loans today as simple alternatives to mainstream lending. If you home has some equity, you can always get a bridging loan to take care of some pressing cash needs. It is, however, advisable to think about all your options before using a bridging loan as an alternative to mainstream lending. Bridging loans are perfect when you have a clear exit strategy i.e. an ongoing property sale that is about to be concluded. A bridging loan will also be perfect for you when you intend to use it for property investment purposes only i.e. when you want to a buy-to-let mortgage.

You should also consider taking a bridging loan when you are sure you can get access to a mortgage loan with a mainstream lender. This is important since it eliminates the risk of losing your home/property in case you are unable to meet your repayment obligations. In simpler terms, you shouldn’t take a bridging loan if you can’t qualify for a typical mortgage loan. The FCA has raised concerns about financial advisers recommending bridging loans too quickly. This can be attributed to the high-risk and high-interest aspect of such loans. Ideally, you should tread carefully if you haven’t taken on a bridging loan before. Besides the high-risk and high-interest aspect, bridging loans also tend to attract hefty fees and some hidden charges as well which could easily render the loan unmanageable.

In a nutshell, a bridging loan shouldn’t be viewed as a suitable alternative to traditional lending. Short term loans like payday loans are better alternatives since there are lenders that offer high borrowing limits capable of catering for substantial cash needs.

Getting a bridging loan

There are many bridging lenders in the UK ranging from small one-man bands to professional outfits regulated by the FCA. When taking out a bridging loan, stick to lenders who are regulated by the FCA since such lenders are bound legally to recommend bridging loans when they are appropriate for you.
 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Borrowing for a holiday: Is It A Good Idea?

Borrowing for a holiday: Is It A Good Idea?

Let’s face it! It doesn’t sound too smart taking out a loan to finance a holiday right? Well, yes but there’s a twist to it. You’ve probably heard that it’s a bad idea to borrow to finance a liability. Well, a holiday can be an asset or a liability depending on who you ask. So, should you really borrow to pay for a holiday? If you want to take out a personal loan or any other kind of short term or long term loan to finance your holiday, here’s what you need to know first.

1. There are situations that warrant borrowing for a holiday

First and foremost, it’s important to note that it’s not always a bad idea to take out a loan to finance a holiday. Having quality time during the holidays with your family is very important so there’s no problem borrowing some money especially if you can afford it. Furthermore, you don’t need to be broke to take out a loan. You may be taking out a loan because you don’t have access to your money at the moment. For instance, you may have some investments that you don’t want to liquidate because the returns aren’t favorable at the moment. In such a case, a loan is justified. The consequences of failing to spend quality time with your family is worse than having to borrow a small loan to fund your holiday expenses. If you can pay for the loan comfortably, go ahead.

2. You need to plan in advance (know how much you need to borrow)

When taking a loan to fund your holiday expenses, you need to plan in advance otherwise, you will end up having problems later. You should never take out a holiday loan before you determine the amount of money you need. Borrowing using estimates is a recipe for disaster. Planning in advance ensures you borrow exactly what you need which is a great way of controlling your expenditure. It doesn’t really matter if you are taking out a payday loan or personal loan to finance your holiday, you must know how much you need in advance.

3. Look for holiday loan offers

Retail stores aren’t the only businesses offering great deals during the holiday season so, if you have to borrow, make sure you are getting the best deal possible. Banks among other financial institutions offer great loan deals for the holidays. It’s therefore up to you to source for the perfect holiday loan deals. There are plenty of great holiday loan deals available currently in the UK. You just need to shop and choose the best deal for you.

4. Plan to spend wisely

Most people have problems on holidays because of overspending. It’s very easy to overspend during a holiday if you don’t have a budget/plan in place. This is precisely why many people end up taking more than one loan to fund holiday expenditures. To avoid taking in an extra loan and incurring unnecessary expenses, spend wisely. Avoid impulse buying at all costs. You should also capitalise off the numerous discounts offered during the holiday season. Always remember that there is life after the holidays. Have a budget and don’t get carried away!

5. Borrow to fund basic holiday celebrations

Sometimes you may feel the urge to borrow to fund an overseas trip. In such a case, it’s better to consider less expensive holiday celebrations unless you lack money temporarily. It’s never a good idea to borrow to fund a lavish holiday especially if you will have trouble repaying the loan.

Summary

The holiday season has many surprises. You may not get your finances in order in time because of many reasons i.e. late/delayed payments etc. In such instances, you may be forced to borrow to fund your holiday expenses. As long as you plan in advance, look for the best holiday loan offers and spend wisely, you shouldn’t have any problems repaying your loan after the holidays. Furthermore, there is much more to holidays than spending money. If you can stick to a loan amount that is manageable, then there is no problem with taking out a loan for a holiday.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
How Can You Use Technology To Save Money?

How Can You Use Technology To Save Money?

To be able to reduce your over-reliance on short term loans such as payday loans, you need to save enough money first. Fortunately, there are high-tech methods you can use to boost your saving efforts. You can save a lot of money using technology. Here’s what you need to do;

1. Shop online

You can save lots of money if you choose to do most or even all your shopping online. The internet is full of amazing shopping deals. There are very many online shops in the UK that offer discounts that are impossible to get offline. You can use discount coupons to get even better deals on anything you can think off from food to household appliances among other types of household goods. It is also possible to buy clothes online, cars and cosmetics, name it!

Deals aside, online shopping offers unmatched convenience which also attracts savings. When you do your shopping at the comfort of your home, you save on transport costs. You also save precious time which can be channeled to doing more important things. You also enjoy other saving benefits such as free shipping when you buy from most online stores.

2. Use budgeting apps

You can also use budgeting applications to help you in your saving efforts. There are very many free budgeting apps available today. You can install such apps in your Smartphone, tablet or laptop and use them to prepare a budget, track your spending, etc. Many people have problems saving because they find it hard preparing a budget and monitoring their expenditure. Budgeting apps do all the work for you.
All you need is to make a few inputs i.e. your income and expenditures to get budget suggestions. The apps let you know how much you should be saving depending on your income and expenses. You can also set saving goals to get suggestions on what you should do to achieve them. There are also budgeting apps that can be synced with your credit cards to track spending and alert you electronically when you start overspending. It all depends on your preferences. You just need to conduct a quick search online to get the perfect budgeting app for you.

3. Use VoIP services

You can avoid phone bills by using VoIP services such as Skype and Google Hangouts. VoIP services are online services which allow you to make calls via an internet connection. Most VoIP services are free. They are also better than regular phone calls since you get to see the person you are talking with live. As long as you have a Smartphone, there is absolutely no reason why you should be paying to call your friends and family members. Use these services and enjoy huge saving every month.

4. Use free online text messaging services

There are also many free text messaging services online you can use to send texts for free. In this time and age, you shouldn’t be paying for text messages as well. You can download apps such as Textfree and WhatsApp and use VoIP services on your mobile phone to enjoy free telecommunication services.

5. Entertain yourself at home with services such as Netflix

Many people spend a lot of money going to the theatres to watch movies. If that sounds like you, it is possible to save a lot of money by using services like Netflix. You could also choose services like Netflix as alternative entertainment instead of having to leave your house. For a few pounds monthly, you can rent as many movies as you like with Netflix and watch them all at the comfort of your living room. You can also stream TV shows, and films live with Netflix. There’s a lot more entertainment online. For instance, you can also play games online instead of having to indulge in expensive entertainment outdoors.

6. Hold meetings online

This is another excellent way of saving on travel/meeting costs today. You don’t have to travel to meet people personally today. You can do a video conference when holding meetings with people who are far away from you. Doing this can help you save thousands of pounds in travel costs especially if your job involves a lot of traveling.

Summary

Technology offers huge cost saving benefits. By implementing the above tips into your day-to-day life, you are bound to save a lot of money. Don’t spend any money unless its necessary. Shop online, use budgeting apps, VoIP services, free text services, online entertainment services and video conferencing and watch yourself save a significant amount of money monthly and use emergency loans like payday loans when they are absolutely necessary.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Are Short Term Loans Risky? What You Need To Know

Are Short Term Loans Risky? What You Need To Know

Short terms loans such as payday loans are regarded as risky by many, however, is this really the case? If you’re looking to take out a short-term loan, but you want to know what you’re getting yourself into first, look no further. Here’s what you need to know and do to minimize the risks

Possible risks

Like any other kinds of loans, short term loans such as payday loans have risks. The most common include;

1. Misuse: Short-term loans are prone to misuse more than any other types of loans. As a result, there is always a risk that you won’t use any short term loan you take responsibly. You can do away with this risk by being a responsible borrower. You should borrow short term loans like payday loans when you have pressing needs only i.e. when you have emergency cash needs.

2. Repayment risks: Due to the short term nature of loans such as payday loans, there are higher risks of failing to meet repayment obligations as stipulated in the terms. Typically, payday loans are supposed to be paid off in full using the next paycheck. If you don’t borrow more money that you can repay comfortably, there is a high risk of having difficulties repaying the loan in full. The best way of avoiding this repayment risks is to always make sure you can repay the loan amount in full without difficulties during your next payday.

3. High-cost risks: Short term loans also tend to be more expensive than regular loans, so there is a high likelihood of being overcharged especially when you don’t take the time to borrow from reputable lenders. Payday loans are good examples of expensive short term loans if you borrow without doing your homework. There are very many unscrupulous payday loan lenders in the UK who overcharge their customers by using confusing terms and conditions. To avoid this, you need to borrow from reputable UK payday loan lenders only like Swiftmoney.

4. Habitual borrowing risks: Short term loans are also known to cause habitual borrowing i.e. borrowing when you don’t need to. You should never get a short term loan simply because it is available to you otherwise you stand to plunge yourself into a never-ending debt cycle. Furthermore, the loan might not be available to you later when you really need it. It is worth noting that failing to repay any loan damages your reputation as well as your credit rating.

5. Scams: There are also more scams associated with short term loans than there are scams associated with long-term loans. The popularity of short term loans like payday loans has attracted a lot of unscrupulous lenders out to exploit lenders. Some even pose as lenders only to steal the identity of their clients. The importance of dealing with renowned payday loan lender or broker can’t, therefore, be overemphasised. In fact, dealing with a renowned payday loan broker like Swift Money can reduce most risks associated with payday loan today.

Verdict: Are short-term loans risky?

Short term loans can be very risky if you are dealing with a bad lender. When you choose a good lender, you get rid of most of the risks associated with short-term loans. First and foremost, there’s need to worry about scams if you are dealing with a registered lender with all the relevant FCA authorization. You also don’t need to worry about paying a high-interest rate or paying more in fees because of hidden terms and conditions.

It’s also possible to reduce the risks associated with short term loans by being a responsible borrower. If you borrow a payday loan for emergency reasons only, there should be no cause for concern. A responsible borrower also uses his/her loan for the intended purpose and repays the loan as agreed. Being a responsible borrower eliminates risks of misusing your loan, having repayment problems as well as becoming a habitual borrower.

In essence, short term loans have risks. However, the risks can be eliminated by choosing a lender wisely as well as practicing responsible borrowing behaviour.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.