When Should You Make a Personal Loan
Before you draw the pen to digitally sign or agree to a personal loan, you should make sure that you understand how the loan could benefit or harm you .
Below are some signs that a financial product is credit, loan or financing, it may be perfect for your needs:
You will borrow money with fixed interest and fixed installment
One of the biggest benefits of personal loans is the fact that they offer a payment schedule with fixed installment and fixed interest rate.
This means that you will make the payment of the monthly installments set in advance and will never be surprised with a ticket or an automatic debit in the account with a higher value than the previous one.
If you need to finance money with interest, and do not want to have surprises along the way, make your personal loan in the right amount, with interest and fixed repayments from start to finish.
You need to borrow money for a specific purpose
The resources released on a personal loan serves to cover any type of expense that you desire, the loans are best for people who have large expenses that need to be pay with some time.
This could include uninsured medical expenses, financing a new car, the complete overhaul of the roof that you had no idea you would need to replace.
With a personal loan, you can borrow a fixed amount of money, then pay it back over several years. Most loans are offered in amounts ranging from $ 100 to $ 50,000 or more, the interest rate can be as low as 0.89% and as expensive as 25% per month, depending on your credibility and the modality contracted.
Are you sure you can afford the new personal loan
Just because you qualify for a personal loan, this does not mean that you can afford it until the end.
Before you make your loan, you should use a simulator or loan calculator to find out if your income or salary will be able to support future monthly payments. Based on your repayment ability borrow the amount with the best interest rate that you qualify for.
If you are one of those who maintains adequate financial control, take a look at your incoming budget and expenses to see if the loan payment fits between the lines.
If you do not fit or get cramped, you should probably postpone getting a personal loan until you can reduce your living expenses – at least for now.
You qualify for a loan with good interest rates
Your credit is good or perfect enough. You have adequate score and score to qualify for a personal loan application with fairer interest rates and good repayment terms.
Although it is possible to be approved for a loan even if you are dirty and negative name, this will make the interest rates applied are much higher and with few privileges to contract the loans.
How many will you pay? Some personal loans for negatives come with monthly rates of more than 15%!
If you are restricted in the CPF, and this has made you unable to take credit from major banks and financial institutions, you may want to delay your loan application until you can take steps to clear your credit history and increase your credit score.
To get started, locate all the late debits you have and upgrade, make sure you do not miss any more monthly payments in progress. Pay off your debts and credit card balances. Try to use only 30% of what you earn with credit.
If you need access to credit to improve your score, clear your name or pay off debts, it may be interesting to read these two articles on how to do debt consolidation and unify all debts in one.
You want to consolidate higher interest debt by hiring a new personal interest loan lower to save money
One of the best resources for using a personal loan is when you discover that you have too much debt with high interest rates.
Eita! Is Marcos crazy? Of course not! This is a great truth only if your credit is good enough to qualify for categories of personal loans or payroll loans that offer low interest.
If you consolidate higher interest debt with a new personal loan with fixed and lower interest rates, you will start saving money right away. In addition to getting out of several payments to make just one every month, this can also simplify more organization in your finances.
When Should You Ignore a Personal Loan
Although any of the above reasons is good, if you want to make a personal loan, there are many reasons to ignore personal loans – or any other type of loan – in total. There are also scenarios where a different financial product would be more beneficial.
Some of the reasons that a personal loan may not be for you include:
You have debts and need more money to keep
If you are struggling to make payments on credit card bills, car loans, consumer bills or other types of expenses, chances can be good lending more money – but it will not help.
In fact, asking for more money just to breathe for the next one will not end up with debts and expenses, worse than that, could lead to an endless debt spiral.
After all, you will add another monthly payload. This is probably a bad idea when you can not keep track of all payments that are already in progress.
If you are really wanting to keep the lights on, it is wise to check your finances before borrowing money. Consider cutting or reducing some expenses, increasing your cash flow, and if necessary, totally changing your financial control plan making your basic budget more dynamic for a while.
Find a way to cut costs in some way, this can improve your financial situation without having to borrow more.
Do you want to finance your vacation or new furniture?
If you want money to buy or do something that costs dear, financing the money needed can leave you in a state of joy and pain. Taking a vacation in Disney or Paris can look beautiful in Facebook or Instagram, but not in your pocket.
Do this, but it will not be long after the trip to repent of the feat. Spending a few days having fun and spending the next 4 or 5 years paying off a loan with interest does not seem like sensible.
There is nothing wrong with traveling, having fun, touring the country alone or with family, but you should at least try to save money to pay for any travel in cash.
Trust me, buy something you really want, it’s so much more fun when you pay with cash, get a discount and still have little interest or financial charges.
You want to refinance a small amount of debt
We have already mentioned how a personal loan can be used for debt consolidation with high interest rates. However, this becomes more real when you have too much debt to refinance and need longer terms to repay it.
If you are owing only a small debt that you could pay in up to 12 months or less, you may well look for other ways to get the money needed to pay off the debt.
Do you want to remodel your home?
Whether you totally remodel your home, a personal loan can work perfectly depending on the amount needed.
You could also consider a “home equity loan”. These loans work similarly to personal loans by offering fixed interest rate and equal installments throughout the agreed term.
The difference is that home equity loans require a collateral – which means your home stays as collateral, making the transaction less risky for the lender – so they generally apply lower interest rates.
Interest rates for home equity loans tend to be low, but stay tuned for release time and additional costs included in the amount of the installment you make, interest of 1.45% turn 1.89%. In addition, your home is retained by the lender until you have finished paying all installments of the loan.
Before completing the form for a loan
“A personal loan can help you achieve a myriad of financial goals, but it can also cause as many problems as it solves.”
Before you apply for your newest personal loan, take stock of your financial situation and make sure that you know where you are getting into. Personal loans are valuable financial support tools, but can also lead to years of stress and debt.