April 21, 2020

Responsible borrowing involves setting the right criteria

By Dexter Stangl

Managing your personal or family’s finances is crucial in order to lead the life you so desire. When money is sufficient to meet the basic needs of your family, then problems concerning money are kept at bay.

Unfortunately, not everybody is in a stable financial situation. This leads some people to borrow money from parents, siblings, colleagues and lending companies. Sometimes, though, they may borrow funds from two or more sources at one time which would eventually cause them accumulate debts.

In the US many people are taking advantage of the unsecured personal loans provided by short term lenders. But you have to know that not all lenders are doing well in their business today. Latest reports say that the personal lending market in the country suffered losses in 2019. Unaware to you, many lenders have actually closed shop.

According to Datamonitor, the number of lenders went down by 12 from 58 in 2017 to 46 in 2018. The number further dropped in 2009 to only 37 which means then that credit supply remains restricted up until now. Datamonitor says lending market is expected to improve by 2020 yet.

That piece of news may not be enough to keep the spirits of borrowers up, but this one might do. This pertains to the state of unemployment in the US Fortunately, more people are getting hired as the number of unemployed went down in December 2009 for the first time in one and a half years based on data from the Office of the National Statistics (ONS).

From the total unemployment of 2.46 million, the figure dropped 7,000 which was equivalent to 15,200 people over the month. The rate reduced from 7.9 percent to 7.8 percent. It may be a small percentage but at least, people are going back to work even if it’s just on a part time basis. This is better than not earning any income at all.

Having your work, however, should not make you confident to just borrow money here and there when you are in an emergency situation. When you seek the help of lending companies, it is strongly recommended to make the right choice and not just jump on the first lender you come in contact with.

As always, be careful when you select the lending company from where you will borrow money. Shop around first and get to know each one of those that you have shortlisted. Gather as much information as you can such as how long they have been in business, the interest rate they charge, other fees that they charge and their payment terms.

From the information that you have collected, you can then set a criteria to guide you in choosing the best lender that can fulfill your financial requirements. Once you have chosen the right one, get to know more about their policies and the volume of their customers in the past as well as in the present. The data will be your gauge as to how well the company has earned its customers and encouraged them to avail of the service again.

So there, be aware of your responsibilities as a borrower and you’ll avoid mistakes along the way.