When you need a quick financial solution, taking out a loan can be a big help. Even though you’ll probably have a valid reason if you’re thinking about borrowing money, it’s always worth considering the urgency of your situation before you go ahead and apply.
In this guide, we’ve outlined genuine reasons to get a loan and a few things to bear in mind if you do – along with some of the signs that a loan might not be the best idea for you.
When could a loan be a good idea?
It’s not always easy to keep on top of your finances. If you need some extra support and you think that applying for a loan could be an effective choice, you might be:
- Undertaking repairs and interior designs
With the average cost of renovating a three-bedroom house now exceeding £75,000, it’s hardly surprising that most families need a bit of backing to help get the job done.
- Dealing with an emergency
Whether it’s unexpected medical treatment, vet’s bills or costs incurred after an accident, emergencies can be expensive. For many people, short term loans or alternative to emergency loans in an urgent situation can help to cover these unforeseen expenses.
- Moving house
Moving house is never simple and often involves paying for more than just professional movers. It’s not unusual for homeowners to rely on a loan during this stressful, major life event.
- Covering the cost of a new car
Once you’ve got your heart set on a dream car, it can be difficult to let it go. Taking out a loan is a popular method for managing payments for a new car, mostly for the convenience of spreading the cost.
- Paying for education
From university fees to taking an online course, learning opportunities often come at a price. Even for a short-term commitment, applying for a loan can alleviate the pressure.
When is getting a loan a bad idea?
Sometimes, money worries lead to misguided decisions. It might be helpful to familiarise yourself with how lenders approve your credit application before you submit one.
Applying for a loan might not be the best choice for you if:
- You don’t have control over your spending
If you spend impulsively and live from one payday to the next, it’s highly likely that you might not be able to afford loan repayments. Start with budgeting first, and only take out a loan if you have savings upon which to fall back.
- You can’t afford it
Occasionally, people might consider taking out a loan to distract from the fact that they simply can’t afford the next big purchase. If this situation resonates with you, try to think about your budget and whether you really need to spend the extra money.
- You’re in debt
If you already have outstanding debt waiting to be paid off, it’s more sensible to prioritise paying that off first. Failure to make the repayments on a future loan could only increase your debt, leaving you in an even trickier position than before.