Monday, March 4, 2013

4 Small Loans Traps



Many people think that the  clever solution to get the money they need consists of applying for  small loans rather than taking out a large one. Among the reasons, they  cite, as the "clever" way to go, probably avoiding getting lenders doing  a credit check is the main one, particularly because an individual that  considers small loans as a financial solution is a person with a credit  history already damaged to apply for different type of loans. So that,  it is advisable that you learn what are those small loans traps you may  fall into to avoid them before is too late.

Say No to Payday Loans
One of those debt traps lurking around the corner is applying for  paydayloans. Also known as Fast cash loan lenders, most payday loan  lending companies will offer your the cash that you need and will do  their best to remove all those obstacles that you can find when applying  for a regular loan, but at a price. Their price is never revealed  during the application process, because it is often the fees and  interest rates that they will charge, that often make your debt grow  insanely.

Say No to Small Loans
Payday loans are not the only loans that allow you to borrow small  amounts of money. There are short-term loans that, without being a  payday loan secured by a paycheck, are still offered based on small  amounts of money that people can borrow, but that may require a good  credit history to have the application approved. Nonetheless, the  imbalanced high interest rates of these loans make it hard to predict  when one can fall into a default payment, and therefore head into  another loan debt trap.

Avoid Mixing and Matching
Similarly, many people may recommend that you borrow the lest amount  than you can from different lenders, including payday loan lenders and  secured or unsecured small loan lenders. This way, you can get more  money that the maximum amount you can borrow by law in your state of  residence, but diverse high interest rates when combined make a high  debt flammable cocktail.

Loans and Cash Advance Must not Be Confused Credit card holders many times can borrow cash from their own credit  cards, taking this money as a sort of personal loan that they are  borrowing from themselves. Big mistake, the money that you could take  from your credit card, usually known as cash advance, is not a small  loan, but it generates as much high interest as a payday loan.

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