Should I Borrow from a High Street Lender?

There are more and more places on the high street where we can now borrow from. There are different brands of lender and they seem to offer good deals for many people, but they are not the same as banks and building societies and should be approached with caution. It can be tempting to think that these would be a great option for getting some extra money and that they may be more likely to lend to you than a bank or building society. However, it is worth thinking hard before borrowing from this sort of lender.

Firstly, it is important to make sure that you really do want to borrow the money. You may think that you really need it for something and there is not any other way that you can get it, but you should really consider it first. This is because all borrowing costs money and so you will find that you will always have to repay more money than you have borrowed and so you need to consider this. Think about the items you are buying with the money and whether you think that it is worth paying that extra money for them. You will need to consider whether you would have still bought those items had they been that price in the shop.

You also need to think about the repayments as well and whether they are something that you will be able to manage. It can be easy to forget about the repayments altogether but you need to remember that you will have to find the money for them throughout the term of the loan. This means that you need to be confident that you will always have enough to pay for them even if you have a change in circumstances as you will still be expected to make those repayments regardless of what happens to you. If you miss repayments then you will be charged and you need to think hard about whether this is likely to happen to you and how you will cope if charges are added on to what you owe.

High Street lenders have very high rates of lending. They may be more likely to lend to people but they could be a big mistake for many. It is really important to make sure that you know what you are getting in to before you borrow anything. You need to think hard about whether you really need to borrow the money at all and whether this is the best place to borrow from. Look at their rates, both their interest rates and their fees, if they have any and compare that to other types of lending. You should be able to compare lending rates online between different lenders. Of course, you may not be able to borrow from just anywhere. Lenders will look at your credit record and your income and if they feel that you are not able to repay the money they will not lend to you. You may feel that a high street lender is more likely to lend to you. It is worth asking around though, you may find that there are other lenders that are willing to take you on and will be cheaper. Credit unions could be a good place to go. They do prefer lending to customers that save with them, but they do assess people on a case by case basis, trying to work out ways that they can lend them money even if other lenders will not, however, they lend at a better rate.

So although there are risks with all types of borrowing, high street lenders could be worth avoiding if you can. They tend to have higher costs, both with regards to their interest rates but also due to the fees that they charge if you miss any repayments. This means that you could end up paying significantly more for your borrowing compared to if you borrowed through different lenders. It is therefore worth comparing rates and seeing whether there are any cheaper alternatives for you. It can be easy to think that a high street lender is an easy option and more likely to lend to you, but you could end up getting yourself into a lot of financial trouble by using one of these and so they could be best avoided.

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