Common mistakes people make when they get a loan

You go to work and manage your salary the best you can. You get enough to keep on top of your bills and you budget the rest for food, clothing and other necessary expenditures. You are relatively on top of your finances and are working towards clearing you debt and saving. At times though, you wish you had a little extra to enjoy a little treat.

You may consider taking a loan to buy the things you dream of; a new car, family, holiday, new wardrobe but there are ways you can use a loan to improve your finances for the long terms.

People experiencing financial difficulty may decide to use a loan to get out of trouble. It’s not always unavoidable to use a loan in this way and managed properly, not bad at all. But there are a few mistakes in the way people handle or even view at loans.

Loan mistake No. 1 Spending your loan on materialistic items
When it is difficult to make your salary stretch, it’s normal to want a little extra to spend on yourself. It’s better money management to save for your luxuries. Most times loans should be used in emergencies, to get you out of sticky situations. Loans should also be used with constraint.

Loan mistake No. 2 Not using loans for investments
Investing may seem like it’s reserved for the wealthy. Though investing is exactly what made some people their money.

There are a few close to home investments that do not require specialist knowledge. You could invest in your career by taking on further education or buying necessary goods for your job like a laptop or a car. Perhaps you want to invest in your child’s education by paying for tuition fees or a private tutor. Improving your home is another investment that could add thousands to it’s value. Or, perhaps you have a business or are thinking of starting. A loan can be used to develop it.

Spending money in these areas could change your financial life in the future.

Loan Mistake No. 3 Taking out more than you need
Often people find themselves in debt they can’t manage because they borrowed more than they need and or could afford. Decide earlier on how much you can afford to make in loan repayments and don’t go overboard even if your credit score says you can.

Loan Mistake No. 4 Not shopping around for the best rates
Shopping around for the best interest rates on your loan should not be neglected. Get the best deals and the lowest rates.

Currently you can borrow a JL Money Short term loan at the lowest rates in the subsector. Learn more by speaking to one of our expert advisors or Apply online today.

Loan Mistake No. 5 Not choosing the right type of loan
Long term loans, payday loans instalment loans are all solutions to your money challenges but be sure you choose the right product for you. Consider issues such as why you need the loan, when you want to pay it back and affordability. Read our article on choosing the right short term loan here. It will help you decide.

Further reading:
Moneysavingexpert.com
MoneyAdviceService.org