Taking credits is always a risky activity. It is rational to remember about it. In America, there are many people who benefit from a payday loan. They take this financing to satisfy some needs. There is always a possibility to take payday loans in different currencies. It is good to think twice before doing that. There are many reasons for that.
Short-term financing is not very big. It is the first thing to remember. It is quite beneficial to take a loan in US dollars. Here are some reasons for that:
- It is a stable currency. It is one of the most stable currencies in the world. Its value does not fluctuate a lot. It can be easily converted into any other one in the world. There is no much point in taking in other one than US dollar.
- It is a hard money. That is one more important factor. The list of hard currencies is defined. There are not many of them that belong to this list. Dollar and euro are key hard financial assets.
These reasons make it evident that it is good to take a credit in dollars. It is very beneficial. If one decides to take credit in any other currency he/she runs several risks:
- Devaluation. It is one of the key reasons why taking credit stops to become advantageous. On the date money is transferred to a bank account of a person, its value can change a lot. It can go down.
- It can lose purchasing power. Goods and services in hard currencies have a stable price. The opposite happens if we talk about soft ones. Prices of products in this money change a lot. They often become less beneficial.
These are minuses of taking a loan in foreign currency. There are several ways to diminish the risk of losing money. Here is how to do that:
- Indicate what foreign currency will be used for a loan. It is good to indicate the exchange rate in the contract. If it is fixed, one will not run the risk of its devaluation.
This is the most rational way to protect oneself from money devaluation. Individuals can hardly negotiate this with credit firms. It is better to employ a lawyer for that purpose.
The lawyer will help to negotiate the terms of a loan agreement. He/she will ask the lending company to put a fixed exchange rate in the contract. This will make loan taking automatically more beneficial. This is the only way to make small loan in foreign currency advantageous.