One thing we agree on entirely is that holidays are cash pits. It was revealed in a survey that most people’s average expenditure on presents alone on a low is a whopping $980. Considering trees, food, decorations, parties, and travel are yet to be included. Christmas is not a cheap affair. So, if you had not saved enough for it, you are likely to turn to the lenders for a way forward.
Many people apply for personal loans to help cover the extra costs. These loans do not need any form of collateral on them. Instead, one receives the amount applied for at an origination fee, the fee ranges from 1-5%. So, depending on the amount applying, for example, if you apply for say $1000, you will get $950. $5 is deducted as the origination fee.
Now, before I jump into the tips on how to get yourself a personal loan for gift shopping, I would like to broaden your activity list so that before you get in debt, you would think long and hard on how to keep it on a low.
Consider This Before You Borrow
a. Volunteering. Before you step out to get that pricey gift, you can decide to spend time with whoever you’re planning to gift. Also, you can decide to babysit for them, offer to assist the elderly with household chores, etc. this is called the gift of time.
b. Borrow from home. If you decide to go into debt, it is good to ask a friend or family for a small soft loan before considering other financial lenders. This is an attempt to avoid interests and timelines, which, if defaulted, spoil your credit rating.
c. Prepare a budget. It would be suicide to borrow, having not made a budget of the anticipated spending. This is critical as it will only allow you to spend on what you have set out to spend and limit the amount you borrow for.
Also, you should remember to control your urge to continue shopping when you realize some changes from your budget. For instance, if a gift in your budget is costing $20, and you get it in a store costing $12, you should not continue shopping for more so that you can spend the rest of the $8.
d. Plan. I personally live for Christmas. This, however, does not mean I go into it blinded by the euphoria and eagerness that is attached to it. Planning is essential, for instance, you can decide and tentatively come up with next year’s gift list, keep a copy in your purse or wallet. Whenever you see the right gift at a low price, make a purchase and strike it off your list, in 10 months, I guarantee you’ll have done almost 90% of expected purchases. Another way is to open a Christmas dedicated savings account, in this account, you break down your usual expenditure or that which you’re likely to spend next year and make periodical deposits. Doing so will cushion you from financial stretches that come with Christmas.
What to Pay Attention To
Income. Most lenders will want to know if you have a steady flow of income and its source. This is to ensure that you can make the minimum monthly remittances. Some generally accept any stated income amount. Other lenders, on the other hand, require you to surpass their minimum income threshold. This is, however, a requirement when applying for a large number of cash loans.
Employment. Although this is not an absolute requirement across all creditors, a majority of lenders use it as a base for credit qualification. If they need your employment profile, then it should be on a full-time basis. Part-time jobs may not qualify you for a loan in such an institution.
If self-employed or retired, you have to demonstrate that you can afford to settle the loan from your job or retirement benefits that you enjoy. However, not so many loan options are available for these kinds of job descriptions.
Credit history. This is the primary determinant of whether you qualify for a loan or not. It is the easiest way that creditor determines your creditworthiness. They cross-reference your details with the bureau to obtain your score. A good score is an indicator that you are not a defaulter. Hence you might want to steer clear of late payments and defaults for they dent your rating.
Your current assets against liabilities. Lenders may require you to list your debts against your income and assets, so they can compute your debt-to-income ratio. The loan may be disapproved if the DTI is low or balanced. A higher-income boosts chances of qualification.
Interest options. Credit unions and banks usually offer credit at reasonable interest rates. So, it is advisable to watch on the kinds of interest you accrue. Although a lot of paperwork is required, it is worth it then opt for faster loans that scruple your good credit rating. Other lenders also charge ridiculously high-interest rates since no collateral is required, and the loan is processed in real-time.
Typically, Christmas gift loans are not entirely huge. Small loans don’t attract that much interest, and since they are due in the next month or so, it is, therefore, very convenient.
Apply for the Christmas gift loan a week or two before the day you wish to shop for these gifts, so you give yourself ample planning and budgeting time to avoid spending on unplanned things. Moreover, it is a good strategy so that you go shopping when you are certain of the gifts you can afford.
The Bottom Line
It is advisable to remember that you are not guaranteed a personal Christmas gift loan. Your loan might be approved or denied approval. So, you can vary your options and see which plan fits. Again, we do not recommend taking a loan for Christmas. If you do this, you will be spending what you do not have, and this amounts to poor spending habits. Learn how to deal with loans and compare their rates at https://www.loanadvisor.sg.