Finance is a tempting option when faced with a purchase you might not normally be able to afford, however it comes with a few serious consequences. While it will definitely appeal to your impulsive side and tempt even the savviest shopper, it pays to be aware of the risks. Here are 4 important things to ask yourself before purchasing anything on finance.
Before you go any further, ask yourself why you would need finance to complete your purchase. If it is a large item which you have planned to buy for a while, finding a good finance package can be great. However if you’re turning to finance because it is an impulse buy and you can’t quite afford it, you could be leaving yourself open to difficulties with debt down the track.
What About the Interest?
Always take the time to consider the interest offered with the finance, and calculate how much you will be repaying in total if the loan runs to the full term. High interest rates that kick in after an initial ‘interest free’ period can become crippling to your finances, so it pays to be aware of exactly what you are up for.
What Are the Fees and Charges?
Important parts of any finance package are the fees and charges. Always read the fine print, and take into account any administration fees, late payment charges, early payout fees and anything else that could apply to your loan.
Could There Be Long Term Consequences?
While buying on finance often seems like a very attractive short term solution, it can have devastating repercussions in the long term. Never commit to any finance that is more than you can comfortably repay, and always consider what would happen should you suffer from a loss of income. Being unable to meet your repayments can leave you with an ever increasing debt, as well as serious damage to your credit rating.
Asking for Advice
If you feel like you are struggling financially, or are tempted to resort to finance to purchase the things you need, it might be time to seek some professional advice. Before making any big decisions, why not consider consulting with a professional company such as Fox Symes debt solutions. You may be able to rework your budget or find other strategies that help you to strengthen your financial position and achieve your goals through savings, rather than slipping further into debt by purchasing anything on finance.
It’s important to consider these important questions before making any big decisions regarding purchases on finance. While it might seem tempting at the time, you always need to keep in mind the long term consequences of relying on credit, and the possibility that you could find yourself in more debt than you can comfortably handle. After considering all of these points, you should be in a well informed and clear frame of mind to decide whether or not purchasing on finance is truly the right option for your financial situation.