This Is Why You Shouldn’t Go For A Christmas Loan
Christmas is just around the corner, and you probably can’t wait to ring in the celebrations. If you have been treating yourself with some holiday movies, you already know what to do this festive season, how your home should, and what you need to add to your Christmas dinner to make it wholesome and perfect. Besides that, you also have to buy expensive gifts to put a smile on the faces of your loved ones. However, taking a loan for Christmas is a bad idea, more so if you have a poor credit score. Why? Well, below stated are five reasons why you shouldn’t.
It Might Be Just A Payday Loan
If you have a low credit score, it will automatically be tough for you to grab a loan from a lender who has got a good reputation in the market. It’s a fact that the loans offered to people with a low credit score are payday loans in disguise. It just comes with a Christmas wrapping, and you have no idea what you are signing up for!
As a result, you might have to shell out 400% interest in some cases. The rates might go higher, making things difficult for you. Instead, you can search on the internet for the best personal loans so that you can avail the one that suits you.
A Legitimate Loan Can Prove To Be Pricey
Once you find a lender who is ready to offer you a loan amount despite your poor credit score, you might think that you have finally found the financial help you needed. However, you might have to pay an APR of approximately 36%. This is quite natural for individuals who don’t possess an optimum credit score.
For example, you wish to take your kids out on holiday and want to pamper them. Hence, you take a loan of $2000 for two years. Your payment every month is $113, and the interest amount stands at $712. This implies that the total loan sum of $2000 will go up to $2712. You must keep in mind that you will be missing two Christmases by the time you return the amount.
Late Payments Will Take A Toll On Your Credit Score
Is risking your credit score to fulfill your fantasy this Christmas, worth it? You have to keep in mind that late payments can damage your credit score big time. It will also be tough for you to grab a nice interest rate when you require a loan for an emergency.
The Alternatives To Christmas Loans
Keep track of how many days you have in your hand until the time Christmas arrives. Also, decide the amount you can take from a check so that you can pay for your expenses during Christmas. Jot down a complete list of what you can purchase and divide this list by the number of paychecks you have with yourself. This way, you will know how much you can afford to shell out every time you receive your payment. You might not spend a lot on your loved ones, but you can still make them smile without putting your financial prospects at risk.
A side hustle is also a good option. You don’t have much time before the holidays. You can come up with unique gifts like handmade clothes, wooden toys, or even festive tablecloths. One easy and effective way is to offer your services and earn money. Additionally, you can also get involved in something else. Offering to babysit while parents are out is a fantastic way to rake in some money and use it to pay for your Christmas gifts.
A Few Other Alternatives
If you need money during the holiday season, it is best to borrow from friends or relatives. Approaching a money lender means having to pay back massive interest apart from the money you owe. You must know that with a poor credit score, you wouldn’t be able to grab a low-interest loan from a predatory lender. And that would only further increase your financial burden.
However, don’t forget to repay the money you borrow from your loved one. Remember, trust is a big factor, and you do not want to lose face with your friends and family. So, repay them at the first opportunity you find!
Memories matter the most. You don’t have to make the Christmas celebrations lavish. Small tokens of love can go a long distance in making your loved ones remember the moment forever.
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