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Should You Use a Loan to Settle Bills After Christmas?

16 December 2015 No Comment

canstockphoto5934479While there is much to be admired about the UK’s recent economic growth, some experts believe that it is far too reliant on debt-fuelled consumer spending. This has led a leading business group to downgrade growth forecasts for the next three years, lowering estimated GDP expansion from 2.6% to 2.4%. While this should not detract completely from economic growth in the UK, it does serve as a warning for businesses to measure their spending. It should also encourage customers to become more responsible borrowers, as they carefully appraise their financial circumstances prior to making a commitment.

Should you take out a personal loan to pay Bills after Christmas?

This is a pressing and topical issue at this time of year, especially as the fiscal demands of Christmas take their toll on households throughout the UK. As a result of this, many may well be considering taking out a personal, short-term loan immediately after the Christmas period has ended, in a bid to cover recurring bills such as utilities, food and beverages.

With this in mind, here are the key considerations before making an informed decision: –

The Nature of unsecured Lending

Before you make any decision, it is crucial that you consider the unsecured nature of lending. This is arguably the most important thought process, as unsecured lending does not require the borrower to submit any of their existing assets as collateral. To compensate for this, however, many unsecured lenders apply higher rates of interest to their finance, which ultimately means that you will pay far more over the course of the agreement. You must be prepared to repay more than you borrow, while interest rates will also rise as agreements shorten.

Can you quickly repay a short-term loan?

Once you are comfortable with the generic demands of short-term lending, the next step is to consider individual loan offers and determine whether or not they are suitable. More specifically, there is a need to identify the specific interest rate and length applied to each potential agreement, as this enables you to drill down into the detail of your loan and create a payment plan. You can start by identifying market leading service providers such as www.smart-pig.com, as firms of this type offer the most competitive rates and transparent rules regarding repayment.

Is there a viable Alternative to Lending?

It is important to be proactive when considering spending and borrowing, so any period of financial planning should be undertaken well in advance of making an application. This will help you to identify a potential alternative, as it may be possible to reduce spending over Christmas without impacting on the overall experience or forcing you to borrow in January. This will require a detailed and carefully designed budget, and one that can help you to optimise your finances.

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