7 Ways to Avoid Short Term Installment Loans
Short term installment loans are financial products that can bail you out of a financial emergency. But, in many cases, borrowers struggle to pay these loans back by the due date. Because of this, it may be better to steer clear of the borrowing option. Here are seven ways to avoid short term installment loans.
The Best Seven Ways to Avoid Short Term Installment Loans
According to Elite Personal Finance, short term installment loans are generally available in small-dollar amounts. Most lenders allow those in need to borrow anywhere from $100 to around $1,500. Often, these funds must be paid back within a few weeks. The short repayment schedule causes trouble for many borrowers.
If a borrower is unable to pay the money back in full by the payment due date, then the loan either becomes delinquent or the borrower rolls it over into a new loan product with new repayment terms. In most cases, rolling over a loan is a fee-based service, so the borrower winds up increasing the amount that he or she owes to the lender by incurring additional fees.
Because short term installment loans frequently turn into long-term debt problems, it may be best to avoid taking one out. Instead of taking out a short term installment loan, plan ahead by building up an emergency savings fund. According to Debt.org, you should also do everything possible to maintain full-time employment and pay with cash.
Steer clear of a short-term loan by using your bank’s overdraft service, taking on a second job or selling personal belongings. You can also ask for help from a church or community program.
Focus on Building an Emergency Savings Fund
An emergency savings fund is one of the best and easiest ways to avoid installment loans. If money is tight, start slow. Try saving just $10 or $20 every week or each month and increase it when possible. If you allow your bank to move money to your savings account automatically, you may not even notice the shortage. Before you know it, you’ll have grown a sizable savings fund.
Do Everything Possible to Remain Employed
With today’s uncertain times, staying employed can be a struggle, but to avoid debt, do everything possible to remain employed full-time. Creating positive work relationships, conducting yourself professionally in every work situation and staying up to date on your job skills will help you do so.
Pay for Stuff with Cash
To avoid debt, pay with cash. If you want to purchase something but don’t have enough money, then wait until you do to buy it. This debt-avoiding technique will not only help you stay within your budget, but it will also show you that many purchases are unnecessary and frivolous. It also encourages self-discipline.
Use Your Bank’s Overdraft Protection Service
To help their customers avoid overdraft fees, many banks offer a protection service. Often, this is a free program and all you have to do to get it is apply. If a cash emergency suddenly arises, you can use your bank’s overdraft protection service to cover it.
When you use it, the funds are added to a line of credit, so your bank will likely set up required payments until you’ve repaid the amount that you borrowed. Financial institutions charge interest for this feature, so pay the money back as soon as possible.
Take on a Temporary Second Job
If your goal is to avoid taking out an installment loan when you need extra cash, then take on a second job temporarily. It’s tough to increase your work hours, but staying out of a cycle of debt is worth the effort. Put the extra money that you’re earning into a savings account until you have enough to never need this type of loan.
You may need to be creative to avoid short term installment loans. There’s a reason why the saying “necessity is the mother of invention” is a popular one. Many people start their own businesses because they found themselves in need of money.
So, if you have a talent or are good at baking or sewing, now might be the time to use these skills to earn money. Bake and sell homemade treats during the holidays or sell handmade blankets on social media pages. Clean homes or people’s cars to earn a little more cash.
Sell Personal Belongings that You Aren’t Using
Most of us have a few unused things around the house that are valuable. Whether it’s unneeded furniture in your basement or a fancy dress that you’ve never worn, you likely have personal belongings that you could sell to avoid taking out an installment loan.
With the internet and social media, it’s easy to sell this stuff. Try listing it on several sites to get rid of it quickly and for the most money. Along with acquiring extra cash, you’ll also declutter your home.
Ask for Emergency Financial Help from Churches and Local Community Organizations
Most neighborhoods have churches or local community organizations that will help people when they’re facing a financial emergency. When it comes to churches, you may need to be a member of it to receive assistance. Local community organizations may just require you to be a member of their community.
A church or local community organization may pay for a water bill, groceries or even a car payment. If you need help keeping your power bill paid, then you may be eligible for the Low Income Home Energy Assistance Program, so be sure to check.
You’ll Be Happier if You Stay Out of Debt
The Simple Dollar reports that debt can have a serious emotional impact, and you’ll likely be happier if you stay out of it. Get a second job if you need more money, or seek help from your church. If you have a financial emergency, sell things that you aren’t using. To learn more about ways to avoid short term installment loans, visit the Personal Money Store.