Once you realize you need a little help covering a bill or repair, you’ll want to find assistance as soon as possible. On one hand, you need that extra cash to pay off a bill before its upcoming due date. On the other hand, you want to get the entire experience over with as soon as possible. Though jumping into your loan head-first can be as satisfying as ripping off a Band-Aid, you should slow down in the interest of your finances. Going too quickly can result in choosing a loan that puts your finances at risk.
Step number one of getting a loan isn’t filling out an application form. It isn’t even finding a lender, though we will revisit that step later on. Your very first order of business is something much closer to home. You need to understand your finances.
No loan comes for free. Whether you apply for a mortgage, a personal installment loan, a payday loan, or an auto loan, they all come with fees and interests rates that you’ll have to repay in addition to the principal. You won’t know if a loan is within your means to pay back unless you’re intimately aware of your budget’s limits.
If you don’t already have a budget now’s the time to create one. We understand you’d rather be doing anything else. From binge-watching the third season of Unbreakable Kimmy Schmidt and checking your IG feed to even catching up on some yard work and dusting your bookshelves, you can think of about one hundred things you’d rather be doing than tabling a budget.
Regardless of your personal feelings about the task, it’s important that you stick with it. Without a working understanding of your finances, there’s no way to tell if the assistance you get is a practical stopgap between paychecks or a device that will sink you deeper into debt.
Once you know your limits, you can start searching for your lender. Don’t just stick with the first one you find, even if you’re dealing with quickly approaching due dates on bills and repairs. Like jumping into a loan without knowing your budget is detrimental to your future, accepting financial assistance from the wrong source can de-rail your finances for months — even years — down the line.
As you start collecting names of lenders, dig into their backstories. You’ll want to make sure they have the appropriate license to offer financial products in your state. It should be easy to find this information, if your lender is anything like MoneyKey. MoneyKey publishes its distinct certifications for each state it has authority to operate as a lender. With a simple click of your mouse, you can see details like its certificate number and the authorizing agent, so you can double check if this license is valid.
A certificate is an essential badge for a lender, as it acts as a safeguard against unreasonable rates and terms. Your state will only ever award a license to a lender that abides by lending laws designed to protect consumers from predatory lending scams. If you can’t find this accreditation anywhere on a lender’s site, then you know it’s time to move onto the next one.
If they have this certificate and they offer rates, terms, and conditions that work with your budget, then there’s no need to keep looking. You can apply and see if you qualify for financial assistance. Once you’re approved, you’ll have the cash you need to cover surprise expenses responsibly. So review your budget (or make one) and start searching for a licensed lender. When done right, you can pay off bills and prevent them from de-railing your finances.