Is getting a Short-Term Loan smart?

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Make sure you're able to repay

Whether you should get credit through SMS or not highly depends on your financial situation. Even though the Swedish economy is improving, most people are struggling to pay their monthly bills. As a result, many are turning to SMS loans to get the money they require faster. But however, if you aren’t careful, this type of loan can worsen your financial situation or even trap you in cycles of higher interest borrowing. A very good Swedish comparison solution company, SMS Lån 123, has recently come to market. Find out more about them by visiting their Facebook and/or Twitter page

To secure these small short-term loans, borrowers won’t require credit checks or collateral. Moreover, most of them will offer you the money within one or two days. To get one, you will have to write a check to your lender for the money you are borrowing plus the associated fees. The lender will provide you with the cash and hold the check until your next payday.

When you receive your paycheck, you will have to pay the amount plus the fees. To qualify, some lenders will demand access to your electronic checking account so that they can deposit the money in it. The lender can also debit the actual amount you have borrowed plus the fees if you fail to repay the amount in full and on time.

What will happen if you are unable to repay?
pa If you fail to repay the principal plus the associated fees, the lender will roll over your loan. They will then charge you additional fees and calculate another interest. You will then have until your next paycheck to repay plus the accumulated fees. A major problem people face is that even though the costs seem to be low at first, they are very high (particularly if you consider annual interest rates the lender will charge you). And while these short-term solutions, some individuals get indebted for more than a year. 

Are there smarter alternatives?
Before applying for a payday loan, consider the other available options. Some common options include:
–    Personal loans from local bank
Banks and building societies lend money at lower interest rates. They are therefore a better option for those that can get them. 
–    Family or friends
Even though borrowing from friends and relatives may put some stress on your relationship with them particularly if you aren’t able to repay the money on time, the source is a better alternative. 
–    Cash advance from a credit card provider
Interests for cash advances are higher than those of secured personal loans. 

When should you consider an SMS loan?
–    If you aren’t earning enough money to help you qualify for a personal loan.
–    If you do not meet repayment requirements of most borrowers; most lenders have algorithms that assist them to gauge your risk of not repaying. 
–    If you have outstanding credit; most lenders have subscribed to companies which help them track how things are going within a short time. 
–    If your checks have bounced recently
–    If you haven’t secured a job and you have no other option

Also, if you just opened a bank account recently, a payday loan may be a smart idea. But always consider the other options before going for one.

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