Having access to quick cash in today’s world, that is no longer a luxury – it’s almost a necessity. More than two million Canadians will utilize small, quick personal loans in a year. That’s a lot of people taking advantage of the option to have cash almost instantly.
Loans have many benefits and downfalls to them. On the one hand, you have money in your account that you didn’t have before to use as needed. The other hand, though, you have to pay back that money at some point, and usually with interest.
Knowing when it is appropriate to use loans from places like Credit Ninja is essential to protect your bank account. Many of these loans have incredibly high-interest rates that can catch people off guard.
Are you thinking about getting a personal loan? Read this first. Here are six situations in which using a personal loan would be okay, and when it wouldn’t be.
Emergency Household Repairs
Some day’s life just happens, and there’s nothing you can do to avoid it. Items break down in the house that need repairing. When that occurs, you’ll need money quickly to get the repairs out of the way. You could consider this as a valid reason for using a quick loan.
Unexpected Medical Expense
Even with health coverage, there are still medical expenses that you have to pay out of pocket for. If you have a major expense that your insurance doesn’t completely cover, that additional money you pay could be challenging to come up with quickly.
If this happens, then using a quick loan would be an option. You can get the money to pay the medical bills right away, and later pay off your loan on your next payday.
Any One-Time Expense
The two examples above have something in common – their unexpected expenses that are an emergency. Instead of reacting to the circumstances and using a loan, an emergency fund would help cover those costs.
As a general rule (although not always the case for every circumstance), if you’re slapped with a one-time expense that you don’t have quite enough money for right now, then a quick, small loan could be an option.
(Don’t) Pay Your Mortgage or Rent
If you need to get a loan to pay for your mortgage or rent, then you may want to reconsider your living situation. Having to borrow money to pay your living expenses will only get you caught in a nasty cycle and leads to debt.
These payday loans can cost you more money in the long run if you’re not smart about them. The high-interest rates end up making them quite expensive if you don’t pay them off right away.
(Don’t) Money for Travelling
Just like you want to consider your living arrangements if you can’t pay rent, if you need a loan to take you on a vacation, then maybe now is not the time to go on one. A vacation is a luxury that shouldn’t throw you into (or deeper into) debt.
Wanting to take that vacation? Start saving up for it now. Revamp your budget to be more travel-friendly. Even if you don’t have a trip planned at the moment, set aside money in a travel fund for when you do get the travel bug.
(Don’t) Any Recurring Expenses
You guessed it – our two examples above point out that using a payday loan for recurring expenses is not a good idea. Not only will you have to pay off your loan relatively soon, but you’ll also still have to pay for the recurring expense on top of it. If you don’t have the money for it right now, will you have money for it, plus the loan payment) in a week?
If you’re thinking of using one of these loans, take them seriously. They are not something to just use whenever you feel like it. Remember when you need to pay it off by and watch out for the interest rates.