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Why not to use a Payday Loan to pay for a Vacation
We all run into those financial emergencies at one point in our life. Some people have money saved for these occasions, others use credit cards, and others again use a payday loan to fill the financial gap for the 15 to 30 days where we need the cash. This is what a payday loan is for. Be able to make it to the next paycheck. Pay for the car repair because without a car you will be out of work soon. Situations like this are where the payday loan does its duty.
However, some payday loan lenders advertise their loans to be used for normal consumer needs. Needs? Well, not really. These lenders play with your desire for having a new TV, a new iPhone or iPod, or to go on vacation. Sure, we all like to treat us to those nice things in life, but we need to be able to pay for it and not necessarily to buy these items on credit. Especially, not to buy these items on very expensive credit.
While this article is mainly written with the payday loan situation in mind, it also applies to using a credit card to pay for these items. In both cases you put a consumer purchase onto a very expensive credit account. The initial interest fee on the credit card might be lower, but statistics show that consumers easily need 18-24 months to fully pay off their purchase. That is very expensive at 18%-27% if you ask me. A payday loan is even more expensive, but it forces the customer to re-pay the loan much faster, which is a good thing. The initial interest rate for this type of loan is higher, but the time between when the loan is taken out and when it is paid back is much shorter.
So, while these are the basics the real story is that both types of loans are not designed to be used for normal consumer purchases. We all have seen what the last recession has done to consumers who were in debt way over their head. The number of foreclosures and bankruptcy filings has sky-rocketed. While some blame goes out to the banks and mortgage companies, a lot of blame has to go to those consumers who financed non-critical purchases with very expensive loan type. Everything is good while you have a job, but when the money gets tight these loans are going to destroy your financial status.
Conclusion: Payday loans are a financial product that is designed to be used in a financial emergency. It is expensive, but payday loans are granted faster than a normal bank loan + they do not affect your normal credit history. A fast payday loan is not to be used for normal consumer purchases for gadgets, TVs, iPhones, or cars. Used with the proper understanding of how these loan work is essential to your financial well being.
Taking Out Loans For Travel
If you want to go on holiday but cannot afford the large payment in one go, then you might want to think about taking out a loan for travel purposes. Many people never get to travel to the places they want because of a lack of current cash flow. However, more and more companies are offering loans specifically for travel and holidays. If you want to know more about these holiday loans, then here are some tips about taking out a loan for travel purposes.
What are the costs?
Travel loans are a form of personal unsecured loan, although you can also get secured travel loans in some circumstances. You can usually borrow between £1,000 and £25,000, depending on your circumstances and how much you need to borrow. The length of repayment is shorter than traditional unsecured loans, with typical terms being between 1 and 4 years. You pay back the loan monthly as you would any other loan. Interest rates are fairly competitive, and range between 7 and 10%.
Why use a travel loan?
There are many reasons why you might want to use a travel loan, even if you could afford the holiday with your savings. Many holidays require a large fee up-front in order to secure the booking, and this can be a strain on anyones finances. Getting a travel loan will allow you to pay for all the associated costs of the holiday whilst still having enough money to live right now. A travel loan can allow you to travel to the places you have always dreamed of going, but thought you would never go to because you couldnt save enough money at once.
Travel benefits
Another advantage of some travel loans is that they come with added travel benefits. Some loans include items such as free travel insurance or possible discounts on some holidays, depending on which lender you use. If these offers can help reduce the cost of your holiday, then it might be worth checking out the loan.
Who provides travel loans?
Travel loans can be got through your normal bank, or through travel agents who have teamed up with lenders to offer travel loans. There are a variety of loans available, and it pays to shop around to find the one with the best features and rates to suit your needs.
Why not a normal loan?
Getting a travel loan is slightly different to getting a regular unsecured loan, but is it better? Well, that depends on your circumstances and how much you need to borrow. Travel loans are dedicated to travel and holidays, and will help you get a better deal on your holiday. However, they have short loan terms, so if you want a longer term then you might want to go for a normal unsecured loan. In general, if you can afford to pay back the travel loan in the shorter term, then it will save you money and help you get the holiday you always wanted.