Whether you like surprises or not, life will throw them at you. Some are fun; and others come with a price tag that can turn into an emergency loan.
Three months ago none of us ordinary people knew the coronavirus and Covid-19 even existed. Now it seems we can talk and think about nothing else, especially after President Ramaphosa declared that this is an official national disaster. We don’t yet know what the impact of all of this will be, but it seems certain that there will be financial consequences.
With schools closed until after the Easter holidays, you probably need to make childcare plans. You might decide to stop using public transport, which will make it more expensive to get around. Travel plans might have to change and that could cost you money.
And even if Covid-19 ends up having no impact on your life, the next emergency surprise could be just around the corner.
So how do we prepare for these situations?
First, and most important, is to have an emergency fund. This means you have to save some money every month so that you have funds available to tide you over.
Second, and because you never know how expensive an emergency can be, you have to take very good care of your credit health. Don’t open too many accounts, always pay your loan instalments on time, and check your credit report at least once a year to make sure it is accurate. When you need a loan – and fast – you need to have the kind of credit record that will make it easy to get one.
When you do find yourself facing an emergency, a real I-need-a-loan-now moment, what is the best way to manage it?
Here are some tips:
- Start by choosing the right credit provider. Always go for companies that are registered financial services providers – they are bound by the regulations that were put in place to protect consumers. You don’t want to become a victim of reckless lending. Even in an emergency you must take enough time to make good decisions so that you don’t end up in even more financial trouble later on.
- Figure out exactly how much you need to borrow. Take a close look at the emergency and what you need to resolve it. The worst you can do is suck a number out of your thumb. If you borrow too little you will need a second loan, for which you will have to pay admin fees again. If you borrow too much, you will end up with an unnecessary debt burden.
- Spend a bit of time to understand how the loan will affect your cash flow. Simply click here to access Bayport’s personal loan affordability calculator. Play around with amounts and repayment periods to get a very good idea of what the monthly instalment would be. Now plug those numbers into your monthly budget and see what the impact is.
- Keep a clear head while going through the loan application process. Make sure you understand the terms and conditions, and know exactly how much the loan will cost you. Do not sign anything unless you are sure you understand everything.
- Stick to the loan agreement, pay your instalments on time and, if at all possible, pay more than the minimum amount. By managing your emergency loan well, you can even boost your credit health.