Avoid These Personal Loan Pitfalls

Single moms often hit a financial bump in the road. This is because we only have one source of income that we use to provide for our families. There is a big difference between this and having two sources of income when you have a spouse. We have to take care of our finances all by ourselves.

School enrollment fees, supplies and other expenses can be staggering. God forbid a medical emergency arises. There are also times when we need to have a new furniture or have something in the house repaired. So the solution that comes to mind when these things happen is to get a loan. Loans are a great way to pay for something that we need although they may not be very easy to acquire. Here are our options:

Bad credit loan

Overextending your credit limit happens. Sometime our incomes just aren’t enough for a whole month’s expenses. This is why there are bad credit loans.

There are even those that are tailored especially for single parents. This is where the lender will issue you money to consolidate debt, cover medical bills, etc.

Then you can slowly repay the lender every month or whatever the terms and conditions that you have agreed upon are.

Personal loans have two types: secured and unsecured. Secured loans are the types where you have to pledge collateral. This collateral can be your house or any other property that has substantial value.

In the unlikely event that you are unable to repay the debt, the lender will seize control of your collateral. This is a very bad scenario which is why you should make sure that before you agree to secured loan, you will be able to repay them on time.

The unsecured type of loan is where you won’t have to risk your house or any other property. The only disadvantage to this as compared to secured loans is the interest rates will be astronomically higher and the repayment period may be shorter.

Read and understand the loan documents…completely

Before you get yourself into one of these loans, make sure that you have the best deal. Agreeing to a loan that you know you won’t be able to repay on time can mean getting yourself into an even bigger financial crisis. This is because the interest rate of an unpaid loan is very large.

Look at the different institutions where you can borrow money. Don’t be afraid of asking questions. Remember that this isn’t something that should be taken lightly as it can determine your financial situation for the better or for the worse.

In most of these institutions, there are advisers that will be more than willing to assist you. Take advantage of this service. They know their services best and will be able to offer you the best one for your current situation.