(ThyBlackMan.com) More and more individuals are looking for financial loans as a means for resolving personal and professional matters. Whether it is the need to pay an expected bill around the house or a financial resource for funding immediate business costs, taking out a loan can sometimes be the most effective route to take. However, if you’re not careful with your borrowing practices you could end up falling further behind financially, which creates a cycle of debt that can impact you for years to come.
The Impact of Irresponsible Borrowing
It is often best to learn what not to do by evaluating what others have done wrong in the past. By hearing the stories and circumstances of others you can better position yourself to avoid the same inevitable defeat. Below are some descriptions of irresponsible borrowing and how it impacts your financial future:
Choosing the Wrong Company
Many borrowers are in a haste to resolve their financial matters. They really don’t take the time to research the service provider and simply apply for the loan. The company they choose may not be fraudulent in nature, but can still have an adverse impact on their lives going forward.
Impact: When you don’t research the companies you’re applying with you’re providing an abundance of personal information online which can be used at the discretion of the site owner. Should you choose the wrong company your personal information could be shopped around to other financial institutions that are not so reputable, it can be used to apply for other services, and in the worst case scenario could put you at risk for identity theft.
Solution: Take the time to do a little homework on the company you want to borrow from. For instance, if you were interested in MaxLend Loans, you would first review their company website to learn about their loan offerings and application process. Then you would take a look at their social media accounts, such as the MaxLend LinkedIn account to see if others have liked the services provided by this particular vendor.
Failing to Plan for a Loan Repayment
Another irresponsible way to borrow funds is to fail to plan. As you’re well aware, a loan is provided with the sole intent that it will be paid back in the specified amount of time. Without having a solid plan in place you run the risk of falling into a large amount of debt.
Impact: When you take out a loan without first knowing how you’ll 
repay it you end up paying way more than you borrowed. There are already fees associated with a loan most importantly the interest. When you don’t pay your loan back on time you’re required to pay an extension fee. While it may seem convenient at the time, if you borrow $300 with an extension fee of $90 and you extend the loan 3 times, you’ve now incurred an out of pocket cost of $660 ($300 loan, $90 interest fee, $270 for extension).
Solution: Before agreeing to the loan terms it is ideal for you to review all the fees associated and factor them into your budget. Can you safely afford to pay the extension fee if necessary? How long will it actually take you to pay off the loan? Will the extension cause you to go into further debt? If so, you may want to consider borrowing less.
Skipping the Costs By Closing Checking Accounts
You’d be surprised how many people assume that closing their checking accounts eliminates the need to repay their loan. They assume that if there is no account to withdraw from that the loan provider won’t have a way of receiving their money back. Unfortunately, this line of thinking has a major impact on the consumer.
Impact: Closing a checking account is inconvenient in and of itself. However, a loan company may try several times to continue deducting from the account. For each unsuccessful attempt at debiting the account this tacks on extra fees. If the customer then ignores the lending company’s attempts at collecting it is turned over to collections. At this point collection fees can be assessed and it can be placed on your credit report.
Solution: Communicate with your lending provider in the event that something prevents you from paying on time. They are usually very willing to work with you on coming up with an arrangement that suits your new budget needs. If nothing else, they can note your account that you’re having trouble which can sometimes work in your favor until you’re able to repay.
Being an irresponsible borrower is never the way to go. It only leads to trouble down the road that could impact your credit, financial status, and reputation as a borrower. By following the above mentioned solutions, you can avoid the negative impact and utilize short term loans to keep you afloat when life has backed you into a corner. Whether it’s a need to cover household or business expenses, borrowing responsibly can improve your financial status and create a positive reputation for you going forward.
Staff Writer; Brad Carter
