A Rough Guide To Responsible Lending

When times are hard and money is in short supply you can often be stuck for a route to take in regards to your financial situation. There could be no other option apart from borrowing money, but if you have never done it before then it can prove to be a daunting task. With so many different stories floating around it can be easy to become unsure about getting a loan or using a loan company.

If there is no other option, however, you will just have to take the dive and get a loan. It does not have to feel like doom and gloom and most of the stories have been overly-dramatized along the way so it is up to you to make your own decision.

If you are doing the lending then there is the Consumer Credit Directive (CCD) – this means that both consumers’ rights and lenders duties are tighten and strengthened. The lenders have a certain amount of responsibility as well and for them to make money they must make sure they lend responsibly too. As a lender as well you need to make sure you do all the proper checks on the borrower and that the borrower is aware of all the facts. This way if the borrower knows everything you cannot be liable for the mis-selling of information.

When considering borrowing money you must also consider what type of way you which to borrow cash, as this could be on a credit card or a loan. Both are different in their own way; try not to use pay day loans unless it is an emergency. Whilst they are a way of obtaining money quick and easily, the interest that you pay back on them is highly expensive if you do not pay it back quickly. Please be aware that if you are in serious debt then you should talk to an adviser instead of getting another loan out.

With both, always get the smallest amount of money that you need- this way you don’t spend more and live beyond your means. Ideally as well only use a loan in an emergency and I’m afraid to say some luxuries and treats may have to wait.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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