by Susan Paige

When you are thinking about whether or not you should take out a short-term loan, you should stop to think about all of your options beforehand. If you need money fast, short-term loans can provide it. But they can quickly also add on to your debt with increasing interest by the day, affecting your credit score negatively.

Short-term loans are not usually the answer if you need to pay bills, rent, a mortgage, or give money back to people you owe it to. They aren’t designed to get you out of debt. Instead they prolong the process by continuously adding interest and fees if you don’t pay the money back. When you are struggling to pay for essentials, you should talk to a debt advisor. Many organizations will help you with free, confidential advice. Spending money on consultation is counter-intuitive. You can find alternatives to taking out short-term loans without paying for the advice.

Non-Essential Spending

Companies who sell short-term loans often advertise their loans for a night out or clothes, non-essential items that you should not get a loan for. If you do this, you will end up paying a lot more. Instead of rushing to get a loan, use cheaper ways to borrow and catalog spending in a budget planner.

Alternatives Ways to Borrow

Running out of cash before a paycheck often has desperate workers applying for loans. There are many alternatives to this. It doesn’t hurt to ask your employer for an advance on your salary. You will most likely pay it back out of your benefits, but it sure beats the high interest rates of short-term loans.

Another method is to borrow money from your family or friends. When caught in an emergency, borrowing from loved ones can avoid the risks and payments on interest and additional fees. It is also helpful to put your agreement in writing, work out a budget plan, and discuss what will happen if you’re late on making payments.

Using a credit card may be expensive, but it is not as pricey as loan interest. Paying on time each month is key to keeping your costs down, and avoid spending more than you can repay. Though they come with high interest rates, even if you don’t manage to pay a credit card off each month it is still likely cheaper.

Borrowing money from a credit union is an affordable way to avoid payday loans. While there is a cap on the amount of interest they can charge, be sure to look at the rate carefully as to avoid higher bills than expected. It is also an option to borrow interest-free from the Social Fund.

Using Short-term Loans Intelligently

Though you have all of these options to explore, you may still need to take out a loan. If you choose to do so it is best to make sure you are getting the best possible interest rate. According to specialists from the site MoneyPug, a platform used to compare short-term loans, they should only be used as a last resort but by finding the best rates, you can make sure you don’t dig yourself deeper into debt. It is possible to pay the interest on a loan quickly, without getting yourself caught in an endless cycle of debt and repayment.

Even if you simply can’t avoid a short-term loan, you can make sure you are getting the best rate possible by checking sites that organize companies by interest rates. Doing your homework can be the difference between coming out on top and sinking deeper into debt. There are always other options. Find the best way for you to borrow money by doing research and finding the smartest way to pay bills and other expenses. This will allow you to pay the money back without accumulating fees and high interest. You will have the opportunity to get back on top.