Donít Over-Borrow when you apply for Short Term Lo

Created: 2016-10-07 08:00:00

There are scores of circumstances, planned or unforeseen, that would compel anyone to apply for appropriate loans. However, it is necessary that no one opts for any long term or short term loans in UK that are beyond their ability to repay, hence unaffordable.

Most cases of bankruptcies, either by individuals or businesses, are primarily because of excessive borrowing. Whenever someone borrows money that is beyond one’s ability to repay in a timely manner, it is a recipe for disaster. There are simple yet effective ways to ensure that you do not borrow more money than what you can afford to repay.

Regardless of what situation you are in, you must always have the same approach to assess your affordability. First, you must jot down all your income sources and calculate the amount of money that you would certainly earn. Do not take into account surprising returns or unexpected incomes. Only consider the earnings that are fixed or certain.

Second, you must take into account all your mandatory expenses. Family budgets, household expenses, education and healthcare, any common or imperative expenditure that is incurred every month and a list of miscellaneous expenses must also be taken into this account. The difference of money between all your expenses and all your fixed incomes is your spare money. However, this spare money is not your entire affordability. You must account for savings and for unforeseen expenses. Keep aside a portion of the difference for savings and a substantial chunk for unforeseen expenses such as emergencies.

Once you do the math, the amount of money you have at your disposal is what you can afford to use for the repayment of a loan. If this money is not sufficient to repay the installments of any loan, you have to cut down on any of the expenses that you incur every month. You cannot account for increase in income, if it is not a given or guaranteed.

When you apply for short term loans with Cash Kitty, you must not only compare loans in UK according to your loan amount eligibility but also what you can comfortably repay.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk