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.