Are you considering applying for an online loan? Don’t commit to the decision just yet. Read these three general rules about online personal loans first!
1) Only Use Them for Emergencies
Online loans aren’t meant for every type of expense. They’re not meant for everyday expenses like groceries or gas for your car. They’re not meant for expenses that you know are coming up, like your annual cleaning at the dentist’s office. And they’re not meant for expenses that you have the ability to wait and save up for, like new furniture for your living room.
So, what types of expenses should you get a loan for? Emergency expenses. These expenses must have two basic qualifications: they must be urgent, and they must be surprising. You don’t have the option to put off these expenses for a more convenient time. And you didn’t have the opportunity to plan ahead for them — they were completely unexpected.
These are some situations where you can consider an online loan:
- Your dental crown falls out, and you need to schedule an urgent dentist appointment to replace it.
- Your dog gets mysteriously sick, and you need to rush to the veterinary clinic to treat them.
- Your kitchen sink clogs, and you need to call a professional plumber to clear it.
2) Only Use One as a Backup Plan
An online loan should never be looked at as your first solution for an emergency. It should be seen as a backup plan when all of your other plans fall through.
For instance, do you have enough money in your checking account to cover the emergency expense? Then, use it. As long as covering the expense doesn’t have a negative impact on your ability to pay for other essential expenses throughout the month, it should be fine. If you’re worried that taking away from this pool of funds will disrupt your ability to buy groceries, pay bills or cover your rent, then you should consider an alternative.
Do you have an emergency fund? Then, this is the perfect opportunity to use it! After all, emergency funds are meant for emergency expenses. Withdrawing from this collection of savings shouldn’t hurt your ability to cover your essential expenses throughout the month. The only reason you should consider an alternative solution is when you don’t have enough savings sitting in your emergency fund.
Do you have a credit card? If you already have a credit card, you can charge an emergency expense to it whenever you don’t have enough savings available. As long as your credit card has a low balance, this should be safe to do. You don’t want to risk giving yourself a balance that you can’t manage to pay down, and you definitely don’t want to risk maxing out your credit card.
If all of these solutions are not available, then you can consider an online loan. Go to a website like CreditFresh to see whether you meet all of the eligibility requirements. If you do, you can fill out and submit your loan application. You just might get access to an online loan for help!
3) Prepare for Repayments
While paying off an emergency expense may seem like the final step of an online loan, it’s not. You will still need to handle the repayments.
You’ll want to include your loan repayments as a main spending category in your budget. You may need to adjust some of your variable expenses to accommodate this category. If you don’t follow a personal budget already, you need to start. Download one of the top budgeting apps on your smartphone and follow the step-by-step instructions to build one for yourself.
You should also automate your payments so that they always come out of your checking account on the deadline. This simple step will make sure the repayment process goes smoothly.
Getting an online loan isn’t a frivolous decision. It’s serious business. Follow these three general rules to use one properly.
