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Should you get a loan? Money Advice From CAP Featured

Tom and Joy chatted to Ben Mai from Christians Against Poverty. He shared tips on whether or not you should take out a loan and touched on needs vs wants. 

Check out the interview here

 

Extra info from CAP:

What would CAP say to people experiencing financial changes or uncertainty at this time?

  • · It’s natural to be experiencing worry and uncertainty at this time, and healthy to talk about how you’re feeling. The govt has set up a number to call for free any time to talk to a trained counsellor. That number is 1737.
  • · The good news is people can be proactive with their finances. In terms of money management tips for at this stage, I have two tips to start off with and will go into more next week.

1. Avoid taking out loans

  • · We know people with low credit scores have been rushing to get high-interest loans* as the economic impact of COVID 19 hits home, including seeking loans to buy food.
  • · When the pressure's on and money is short it can be tempting to "solve" it all by taking out a quick loan. But they actually make matters worse next week, especially pay day lenders who have high interest rates – with percentage rates in the hundreds! To go forwards rather than backwards, THINK: Can I reduce my costs?

* According to Keith McLaughlin, chief executive of the Centrix credit reporting agency.

** Credit scores run from zero to 1000, and scores of below 400 indicate people with a history of missing loan repayments, or payments to the likes of power companies). There has been a 23 per cent increase in applications for personal loans in the past five weeks among people with credit scores of 299 or below**

2. Reduce costs: Needs vs wants

  • · A good way of reducing costs is to make two lists: Needs vs Wants. It sounds basic but we do need to remind ourselves that:
                • A need is something we must have like shelter and food.
          • A want is something we might like to have but we don’t need it right now and can survive without it.

 

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