If you are considering applying for a loan, you have nothing to be ashamed of. Almost every person has some kind of debt or some form of loan for different purposes (paying overheads, buying a car, renovating a house or apartment, etc.).
So, if you are considering applying for a loan, the most important thing is to be informed when making your decisions.
First, make sure you apply for the right reason. Second, it is crucial to explore your options and know what to look out for when applying for a loan.
Before applying for a loan, there are five questions you should always ask yourself.
How much money do I really need to borrow?
Before applying for any loan, ask yourself how much money you really need to borrow. For example, if the purpose of a loan is to buy an item, can you save half of that item and apply for a loan for the rest, thereby reducing the amount you need to borrow?
You may need a loan for time-sensitive reasons and therefore saving money in advance is not an option.
In any case, always review your budget and make the necessary adjustments. After updating your budget, you will be able to see how much money you have available to spend to repay the loan.
Do I have enough income to repay the loan and interest?
The first thing to be aware of when applying for a loan is that the required minimum monthly amount of your loan is not the total amount. In addition to the minimum monthly repayment, there will be interest on your loan. Depending on the loan, the interest rate will be matured daily, weekly or monthly.
In addition to your revised budget, make sure that your monthly income is sufficient to repay at least the minimum monthly amount, and ideally, to accrue interest during that period.
To see the total cost of the loan, including interest and monthly installments, see Good Finance’s online loan calculator.
If, after using a credit calculator and reviewing your budget, it seems difficult to repay the loan, then it is not recommended to withdraw the loan.
How much time do I have to repay the loan?
The duration of the loan, or the period within which you must repay the loan, varies depending on the type of loan you apply for and the amount you want to receive. The most important thing is to choose whether the repayment period is several weeks or several months, the loan amount, the loan duration and the related interest rates according to your budget.
One thing to keep in mind is the ability to repay the loan early. Good Finance, for example, allows its customers to repay their unsecured loans without any prepayment fees. This option allows clients to make repayments based on their own budget, which makes repayment of loans more flexible and enjoyable.
Make sure that whatever financial institution you choose, you have the option of prepaying without being subject to sanctions.
How will I manage my other debts?
If you already have other debts such as a credit card or other loans, extra borrowing is not a good idea as it will only result in an increase in your debt.
Before applying for a short-term loan, make sure that you are currently repaying your credit card and other loans conveniently. Does your budget allow you to make another repayment?