There comes a point in everyone’s life when you run into money troubles and you need to find a way to make ends meet. Whilst this is a stressful perio
There comes a point in everyone’s life when you run into money troubles and you need to find a way to make ends meet. Whilst this is a stressful period of time, there are a number of different solutions for you depending on why you need to borrow money, who you are willing to borrow from, and how long it will take you to repay back the money that you have borrowed.
We know that borrowing money can be a scary prospect, so we’ve researched these three different considerations for you, so that you can borrow money in the most suitable way without ending up in an extremely difficult situation.
Why Do You Need to Borrow Money?
Firstly, you need to consider why you need to borrow and how you will spend this borrowed cash. This might be to pay off an outstanding debt which you have accumulated in the past, and would result in court action if left unpaid any longer. This debt may have come from unpaid bills for your home, or even your mortgage. Or, you may need to borrow money just to be able to buy your food for the week as you miscalculated your earnings that month and failed to leave enough money for the final few days, before you get paid again.
Given that the money you need will contribute towards securing your home and being able to live, it makes perfect sense to borrow money. Whilst borrowing money will help you to cover the costs of living immediately, you might want to think of how you will afford daily life. You should consult government advice organisations like Citizens Advice to find out whether you are entitled to any help financially, which would mean that you wouldn’t have to rely on borrowing money in the future.
Before borrowing money, you need to think about whether the cash is going to be spent on necessities or urgent matters that need settling. If not, you might want to try to hold off borrowing money because you could instead find ways to save money so that you can make this purchase in the future – with your own money. This could avoid getting yourself into debt or awkward situations with family members when it comes to returning the money you have borrowed, for something that wasn’t even important to begin with.
However, if you are a business owner or looking to transform your passion project into a business that you need to build from the ground up, borrowing money can be essential for taking the first step towards building or expanding your business. Taking out a loan when you own a successful business that would benefit greatly from investment and expansion isn’t as risky as other circumstances for borrowing money, because you can rely on your business profits to pay back the money you have borrowed. This expansion – with the borrowed money – may be essential to widening your customer base and receiving greater profits that could not have been achieved otherwise.
Who Are You Borrowing From?
Many people look towards their family and friends to borrow money, either on a long- or short-term basis. This might not be the best option if you already have difficult relationships with these people and you know that they do not have a lot of savings. It will also mean that you feel as though you ‘owe them’ something, because they have done you a big favour. However, if you are close enough to your family and friends to know that they have the ability to lend you money, borrowing money from them will mean that you can cut out the middleman. This will save you time, energy and money in the long run, as long as they don’t expect you to pay them interest! In fact, some families would prefer that you went to them for money aid when times are tough, because they have you in their best interests and know that you are sincere.
If you need money to fund your business, they could see this as a business opportunity for themselves and may want to receive a cut of the business. There’s nothing wrong with seeking investors for your business, as this could even help to reach more customers – either by associating yourself with others who will spread word of your business, or by attracting more customers as you become a ‘family business’.
If you’re in need of money instantly and you aren’t in a position to ask family members, this broker can arrange a loan from direct lenders UK wide who can pay out within 15 minutes. Payday UK is an authorised and regulated credit broker who is able to accept over 90% of its loan applicants by working with the best lenders in the market, so you don’t need to worry about whether or not you are getting a good deal because you can leave this in the hands of the broker. Another bonus to many loans offered by payday lenders is that you are able to get money even when you have a bad credit score, when most traditional banks would reject your application. This makes payday loans the preferential option for many with bad credit scores that have arisen from your lack of repayments in the past, or if you have never borrowed before.
Will You Be Able to Repay This Money?
Now, this is an important consideration that you need to keep in mind, but it isn’t always an easy one to answer. If you are borrowing money for purchases that you know you will have the money for once payday comes around, borrowing money doesn’t seem so bad. You know that your pay cheque will cover the costs of the money that you are borrowing, which means that a short-term loan is a good option for you because you know you will be able to return this without extra interest being added.
Bearing in mind the interest when taking out a loan is extremely important because if you aren’t able to pay back the money for a while, interest will be added and this would significantly increase the repayment amount. If you aren’t employed and not searching for a job, you need to consider how you will eventually pay back the money that you borrow.
It may seem like a chore, but if you are not borrowing money to pay for essential things, doing calculations before taking out a loan from a company or friend will help you to decide whether you can afford to accept this money. If you are borrowing from a friend, you can negotiate some agreements and keep them updated on your financial situation so that they are fully informed about when they will receive a return for their loan to you. In some urgent circumstances and emergencies, it is understandable that you may not be able to benefit from doing such calculations, as you need to prioritise and focus on the now rather than the future.
Borrowing money sensibly can transform your life, or business, for the better. However, it can have the opposite effect if borrowers don’t understand the responsibilities that are attached to borrowing money. By following our advice and considering why and how you will borrow money, you can enter any arrangements or contracts with a well-informed mindset that will help you to avoid trouble in the future.