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Tuesday, August 5, 2014

When Should You Not Apply For A Text Loan

Text loans are extremely convenient routes to short-term lending. Once you've registered with a provider on their website, you'll be given a pin code which you can use to text a loan request for £100 when you need to meet an emergency shortfall. The money will be transferred into your account in just a few moments for you to use. It will then be repaid at the time agreed prior to the loan, via a direct debit taken from the card details you provide at the point of registration.

Text loans are ideal for emergencies such as unexpected vet or car bills, emergency repair costs, forgotten birthdays or other occasions where the budget just doesn't quite stretch far enough. They are instant and don't require you to fill out forms, undergo a credit check or queue to speak to an advisor when you need the money. They are simply managed via text message over your phone and if you use them correctly, over time they can help to rebuild a poor credit rating.

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However there are instances when you shouldn't apply for a loan. Like all forms of borrowing, text loans need to be paid back. So you mustn't apply to one, if you are already in debt and know that you won't be able to pay it back.

If you do apply for a text loan and find that you're unable to repay the debt, you'll rapidly accrue penalty payments, as well as high interest rates. These can mount up quickly and if you can't find the money to repay the growing debt, it may be passed to a credit collection agency. At this point you risk being summoned to a court or eventually being made bankrupt if the debt is not cleared.

The same applies if you take out text loans and know that you can't afford to pay them back in time. The penalties for late payment are stiff and keep accruing.

Finally, text loans aren't suitable for long term financial needs. They should simply be used as bridging loans to cover a shortfall or emergency, rather than providing regular sources of cash or to make up gaps in the budget. If you need larger sums of borrowing for longer periods of time, then other financial products, such as personal loans, may be more appropriate for you. In such instances, it makes sense to speak to a financial advisor to find out what best suits your circumstances.

Equally, if you are struggling to manage your finances, then a debt advisor is essential to get your finances back on track. There are a range of advisors to choose from - look for a government sponsored or 'not for profit' advice source ideally. The Citizens Advice Bureau is a good place to start. A debt advisor will help you plan a manageable way out of debt, such as drawing up a budget and contacting any existing creditors you might have to arrange repayment terms that you can meet. Only when you are on top of your day to day budgets and finances, should you be looking to take out text loans, for emergencies.

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