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Using Short Terms Loan To Manage Household Finances

With the rising costs of living in Singapore, more and more households are finding it a huge challenge to stretch their personal finances to meet the high costs of everyday living. Transport costs, prices of property, even food at hawker centres are rising so fast. For a lot of people, especially those who consider themselves being in the working class, there are times when cold hard cash is needed for the short term. In these circumstances, a personal short-term loan can be exactly what is needed.

However, before taking up any loans whether it is short-term or long term, there are always things to consider. You have to work out how much you really need and whether it can cover your expenses and also pay for any other loans that you already have. Here are some tips to help you manage your money more efficiently.

1) Work out and calculate how much you are behind. By having the numbers you will know how much you need exactly. Otherwise, it is easy to borrow much more than you need. You will pay more interest in that instance. And only use funds from the loan for essentials like groceries, utilities, mortgage, etc.

2) Only take a loan that you think is reasonable. No point in taking a loan for the short term which you will be paying through your nose in the long term. The key aspects of a loan will be the loan amount quantum, interest rates, repayment period, and penalties. You can expect short term loan to have higher interest than long term loans. And unsecured loans to have higher interest rates than secured personal loans.

3) Stop spending money on things that you do not need. No luxury items. There is a line that you should not cross. A lot of people run into credit trouble because of shopping sprees. Do not let that happen to you at this point in time when you are already in need of cash.

4) Only borrow what you need. Lenders will offer to lend you more because they will profit more from interest charges. You will still have to repay the loan no matter what. So taking up more than you actually need will only put on more financial burden on you in future. This is even more important if you are the sole bread winner. You family depends on you to make these decisions. Don’t make the wrong one.

5) Remember to pay. Late payments will cost you money not only on interest, but on penalty fees as well. It may be tempting to delay payment because you want to spend the money on luxury items. Be disciplined and always use the money to pay off the loan and essential items first.

Proper budgeting is an important aspect of managing your household finances with borrowed funds. Avoid late payments and defaults on your payments. You will be shocked to learn about how high late payment fees can be. This will also reflect badly on your personal credit.