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Easy Steps to Surviving Christmas Loans 2022

by Amarachukwu
Easy Steps to Surviving Christmas Loans

Easy Steps to Surviving Christmas Loans 2022 – Feliz Navidad! Yikes…. It’s that time of the year again. The Christmas holidays period is here! it is that period that coincidentally wraps up the year and is characterized by celebrations and beautiful decorations.

People around the world celebrate the Christmas holidays on the 25th of December annually. It is usually ushered by the Thanksgiving celebration a month earlier. It is a period that people around the world take out time to celebrate, feast, decorate, visit family & friends, wine & dine, as well as share with others.

In this period, bright lights, soothing sounds, complementary greetings, Christmas trees of different shapes and sizes, and most importantly, Santa are seen everywhere!

As fun-filled as the Christmas period is, it is also a period that some people dread. Some introverts, in such a period, are forced to handle crowds. Other people see it as a period of so many needless expenditures. Therefore, the financial burden of the festivity.

In a bit to confidently handle the financial responsibilities that come with the festive period, people device several means of having access to as many funds as possible. One of such is the Christmas Loan.

 

What is a Christmas Loan?

A Christmas Loan, also known as a Holiday loan is a loan meant for holiday expenses. It is a form of financial assistance offered by banks, credit unions, cooperatives and other lenders to interested individuals to help them cover their holiday expenses.  

It is usually short-termed, allows for an installment repayment plan and can be secured or unsecured.

Secured Christmas loans are usually backed by collateral or savings accounts. The collateral is a tangible asset that can be claimed by the lender if the borrower defaults when expected to repay. The borrower’s income and credit history can also convince the lender of the former’s ability to pay back as at when due.

Are Christmas loans advisable?

In her article about Christmas loans tagged ‘Are Christmas Loans Naughty or Nice? Here’s the Answer’, Cynthia Bowman said “A holiday loan gets tricky for borrowers with low credit scores. The best terms may not be available to an applicant with a checkered credit history. Some holiday loans don’t require a credit check, but tend to have incredibly high-interest rates — up to 1,564.28% APR — that could get a borrower in trouble”.

While also emphasizing the dangers of holiday loans, PeerFinance101 asserts that “Don’t be fooled into thinking you’re getting a ‘special holiday rate’. Lenders use this to get you to borrow more than you need but the rate is really no different than any other loan.”

Easy Steps to Surviving Christmas Loans

As mouth-watering as a holiday loan offer may be, it is always advisable to stay away from it- especially if you have the tendency to default.

The structure of the loan is in a way that default in repayment agreement may spell doom for the borrower. Depending on the loan Terms and Conditions, defaulting may attract an increased interest rate.

 

Pros and Cons of Christmas loans

While we present you the dangers of holiday loans- especially when the borrower defaults, it would be fair to plainly place the advantages side-by-side the disadvantages as the final decision to take the loan or not lies with you.

Pros Cons
Involves a fast process/documentation. Usually completed within the same business day. High-Interest rate. Can get up to 1,564.28% APR
Some holiday loans don’t require you to present a credit check. The lower your credit score, the higher your interest rate as a borrower.
The loan can be short-termed and the repayment period fixed. Defaulting costs more and can worsen your debt.
Application is easy and fast to complete. Defaulting can affect your credit score if the lender decides to report to the authorities.
Intending borrowers with good credit scores enjoy fast responses with interest rates that are favorable. If the repayments of the loans are automatically linked to the borrower’s account, he/she may risk an overdrawn account if the balance is low.

 

What then are the alternatives for an individual that is short of cash in a season with so many expenses as Christmas and other major holiday periods? One would want to ask.

4 steps to survive Christmas loans

The good news is that there are cheaper alternatives to footing the numerous bills for your Christmas celebrations.

While a lot of people complain of the PTSD that they struggle with post the holidays, you can look back and be glad that you made the right financial decision for yourself. These keys would ease the financial burden off your shoulder and make you face the period after the holidays happier;

i. Save up and Budget for the Holidays

This is probably the best option to foot your holidays’ bills. It is not too early to start preparing for Christmas from January.

You may decide to set aside a little amount that wouldn’t hurt your finance monthly, put them away in an account that you rarely touch, and see yourself enjoy your holidays without worrying about expenses. Remember what they say about little drops of water that become an ocean? That is savings in action!

While you save money monthly, you may also want to ensure your budget for the holidays fall within whatever you have saved up for the year.

Working within a budget sure helps you to watch out for expenses that may put you into financial troubles, especially in the incoming year.

After this year’s festivities are over, it’s time to start thinking about next year’s festivities. Consider talking to a mortgage broker to see if refinancing your house loan could save you money over the course of the year by putting more money in your wallet.

Easy Steps to Surviving Christmas Loans

Remember that Christmas is a time for family and friends to gather together and rejoice. Keep in mind that you’re doing this for the people you care about, so don’t be distracted by the compulsion to buy things. This holiday season, budgeting and planning in advance will help alleviate some of your stress.

 

Don’t wait until the end of the year to get your finances back on track if you’ve been affected by the holiday shopping sprees or the end-of-year deals. 

 

ii. Pay advance

The pay advance (or paycheck advance) is another effective alternative to Christmas loans. It is an up-front payment given to you before the actual payday.

If your find yourself in a financial tight corner, you can approach your supervisor or anyone capable of approving a pay advance for you in your company.

Depending on what you agree on, you may get some percentages of your net pay to solve your financial concerns while the remaining are paid to you on the actual payday.

The good thing about the pay advance is that it usually does not attract interest as it is money deducted from your actual earnings.

 

iii. Borrow from Family and Friends

This tip is another cheaper alternative to Christmas loans. Your family and friends are usually people in your circle that understand your situation and would not hesitate to lend you if they have extra to spare.

But just like every other form of borrowings, this tip has its rules too. Top of which is, do well to pay back in good time so it doesn’t affect their finance. Also, make sure it does not affect your relationship with them.

The same way your integrity is important to the bank, credit bureau, cooperatives and other lenders, the same is important to your family and friends. It may be difficult for you to get future financial assistance if you are known to default on previous loans.

iv. Borrow only what you need

If you run out of options and you have to borrow money for the holidays, you may save yourself a lot of stress by borrowing just what you need.

Say, for example, you have saved up for the holidays, but what you have isn’t enough to cover your expenses, you may borrow a little amount and add to what you had saved throughout the year.

Doing this will also ease you of unnecessary pressures.

It is also advisable to go for the shortest term possible for you. When you apply for a little amount to pay back in little or no time, you will get the best rate available, which will save you money.

After getting the loans, you should prioritize paying off your debt within the agreed period as this may have a huge impact on your credit score.

 

Final Thoughts

Christmas is a time of love and reflection of the past year, do not overwork yourself into enjoying it the traditional way, draw up a plan, do not spend above your limit and most importantly, do not take Christmas loans if you don’t need, just to impress, as it can come back to hurt your credit card score, you don’t want to start the new year with bad debt, will you?

In this festive season, we cannot overemphasize the importance of buying what you need over frivolities. Do not get carried away with the season that you forget that you have a lifetime to live. You may also want to consider cheaper alternatives when you shop. Fortunately, Black Friday deals for centuries, have made that decision easier to make.

Enjoy your holidays, and don’t break the bank doing that. Compliments of the season!  

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