When you borrow money, for whatever reason, it is really important to think about whether it is the right decision. This is because there are many consequences of borrowing which should be thought about first such as:
Representative Example: £400 borrowed for 90 days. Total amount repayable is £561.92 in 3 monthly instalments of £187.31. Interest charged is £161.92, interest rate 161.9% (variable). Representative 305.9% APR. We are a broker not a lender. We don't charge fees. We don't sell your personal information.
However, the main decision can often be an emotional one and it can be difficult to distance yourself away from the emotion of the situation when you are calculating whether you should borrow money. It is something that you need to try to work on when you are considering whether to borrow money.
There are arguments which would say that you should only borrow money if it is completely necessary. This means that if you are paying for a birthday party, which would be considered to be a luxury item, then you should not borrow the money. However, it is really hard to rationalise things like this especially in certain situations. Consider if it was a birthday party for your child and all their friends had one and you did not want them to miss out or if it was a special birthday celebration. Therefore it is up to the individual in their specific situation to see whether borrowing money in the right thing for them.
If you do decide that borrowing money is the right option for you, then it is wise to compare all of the loans available to see which will be the best for you. It will depend on how much money you want to borrow, what credit rating you have, what repayments you can afford and the costs of the various loans. It can take time to work out which will be the best, but it is worth making the effort to work it out as it can make a big difference to how much you will end up paying or the loan, how well you will manage the repayments and how long you will have the loan for. Loans vary so much, it is really important to get the right one, whether you are happy to use your home as collateral and extend your mortgage or have a poor credit rating and use a payday loan, they vary a lot and it is really important to choose the right one.
Once you have chosen the type of loan, then you can compare the different lenders to see which will be the best. Again here you will be looking for a competitive price, but you also need to consider how easy it will be for you to manage the repayments and see how much they will be and how often. You may also want to check out the reputation of the lender and see what recommendations there are for the lender and the loan.
The decision as to whether we should borrow money for specific purposes can be a really difficult one. It is tricky to decide whether it is worth spending that money, whether you can afford the repayments and things like that. Deciding this logically can be fairly easy but when you have emotion wrapped into the decision it is more difficult. All decisions we make will have some element of emotion in them and so it is good to make sure that you are aware of this and try to step back a bit. However, the importance of the decision will depend on the amount of emotion vested in it. Sometimes it is easy to realise that a luxury item is just not important enough to borrow money for and that you would be better off trying to save the money. Alternatively, you may know that it is really important that you have the money and that you have no choice but to borrow it. However, you will often not be completely sure as to whether you are making the right decision or not. Then you will need to give things a lot of thought. It could be good to discuss it with others or to spend time writing advantages and disadvantages to try to help yourself make the decision.