Christmas can be a very expensive time of the year. The average spending for this holiday is over $1,500 per family. So, it is no small part of the budget. Of course, many families get started shopping and realize they may need some additional money to finish but cannot wait until the next paycheck.
When it comes to Christmas loans, there are just 3 options: traditional lenders like banks and savings and loans, alternative lenders who offer installment or payday (cash advance) loans, or using your credit card open balance.
Traditional lenders are hard to qualify for loans and have long lead times to process, so they do not work for most people. And most people cannot wait for weeks or months to get the money. Also, the average amount needed for a Christmas loan is not huge. It is often only a few hundred dollars.
Almost half of all people have already used their credit cards to the max, so that option is also off the table. Thus, that leaves us with installment or cash advance loans.
What is a Christmas loan?
Christmas loans are nothing more than a personal loan that does not require good credit or any collateral. Unlike some loans, you can use a Christmas loan any way you wish. If you can qualify for a traditional loan, then that should be your first choice as your interest rate will be much less than most credit cards and alternative lending options.
Is it a good idea to get a Christmas loan?
Adding debt at any time of year is generally not a good idea, especially if it is not for emergency purposes. However, you can’t always avoid your Christmas spending.
When you have no other options, then an online loan from reputable companies is the best remaining choice. Payday loan lenders rarely do a hard credit check, so there is no impact on your credit score. These are fee-based loans, and the fees are determined by your state laws. Every state has lending laws, and online loans are closely monitored. Also, the lenders must be licensed in the state you reside in.
The key to accepting an online loan is to be sure you can pay it back on the due date, which is no more than 1 month after signing for the loan (in all but a couple of states). If you are considering this option, be sure to ask your lender before you sign the exact due date of your loan. If you are not confident that you can pay back the loan plus the fees on the due date, you should not choose this option.
3 Tips for Borrowing Money for Christmas
Often these tips are considered ‘common sense’, but we also forget them when in the rush of the holiday season. So read through these pointers as a reminder of what we all should do.
Establish a Christmas budget
Budgeting for Christmas will help you control your spending. It is best to start setting your budget well in advance of the holiday. Start saving early and ease the stress of shopping by having most or all of the budget set aside before the season starts. If you borrow, be sure to repay your debt on time to avoid any additional costs.
Decide what you can do without
We all tend to go a little overboard when shopping for Christmas, but there are many options to reduce that spending. Perhaps you will focus on the kids or grandkids and not buy a lot for each other. Consider not exchanging gifts with co-workers and most friends. You might have dinner together with friends instead. Be creative and even share dinner expenses with a potluck, as hosting the dinner can also be very expensive.
Shop for specials and deals
There are always coupons and deals online and offline. Check before you buy. You can save a ton by being a smart shopper. Often you can do your research online before you actually start shopping. More than half of all Christmas shopping is now online. It is convenient, and you often get the best deals.
So set a budget, and start saving for 2022 as soon as you can. Explore ways to save by limiting the number of gifts you buy and reducing the big dinner feast budget!
Have a great holiday season!
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