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2023 proved to be a highly stressful financial time for many, and we are clearly not yet out of the woods unfourtanetly.
Given the high volume of calls and emails received from people looking for financial solutions over the past number of months, we decided to speak to this in our first newsletter of the year.
If you are feeling financial pressure at the moment, we promise you that you are not alone. Nobody expected the post-COVID period to "dump" soaring interest rates and reduced property values into our laps so abruptly. Many households that are usually financially stable currently are not. People with a proven track record of managing their finances well are finding themselves in unfamiliar territory.
Please understand that you don't need to navigate through these rougher waters alone. We are here to listen, provide options and, of course, help wherever possible.
Protect Your Credit
Going month-to-month carrying credit account balances that are approaching your credit limits will continuously reduce your credit score - even if you are making your minimum payments. If you need to do some financial restructuring by accessing the equity in your property, this is something you want to act on as soon as possible.
Delaying the decision to act by a few months almost always comes back to haunt you.
Sadly, lending institutions "judge" you based on your credit score. The reality is that the options and or solutions that you may have today (that you may not find all that appealing) may be even less appealing in a few months, assuming they still exist.
Short-Term Financing Solutions
Just because you can be approved for a short-term financing solution somewhere (1 year or less) doesn't mean you should accept the financing. It is possible to put yourself in an even worse position by just focusing on the primary objective of paying out a particular debt/debts. A well-thought-out plan or strategy will be worth the investment of time and be your best approach.
Always avoid making the mistake of just focusing on the interest rate being offerred. It's very important to understand the key terms and conditions of the financing arrangement being offerred to ensure it is, in fact, the best possible fit for your situation.
Marketing techniques today make it too easy today to compare apples to oranges when it comes to lending products.
Questions that you need to consider before taking on a short-term loan:
- How and when do you plan to pay this off?
- Do you think the plan is realistic?
- What happens if you can't repay the loan?
- What needs to happen so that you are in a position to pay it out when it is due?
- What could happen that is out of your control that may prevent you from being able to repay the loan when it is due?
- Is the risk too high to accept this type of loan?
- Are you better off with a different lending solution?
- Are you confident that you know all of your options?
- Are you being rushed or pushed into signing an agreement?
- Do you fully understand the terms and conditions of this loan?
The transactions that are the easiest do not necessarily reflect the best option.
If you have a situation and need help; please don't hesitate to reach out.
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