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Top Factors to Consider Before Applying for a Personal Loan – Part 2

Top Factors to Consider Before Applying for a Personal Loan – Part 2

We already discussed in our past entry about some of the most important aspects to consider when it comes to getting a personal loan. Let’s keep reviewing a few more of them and learn what is best for us to think about when thinking about a personal loan.

4- Can you afford to pay a personal loan?

If you have ever had any debt-related trouble before, then you know that even when you think that you might be able to assume the responsibility of a personal loan, in the end the circumstances can prevent you from fulfilling your payment promises. So, whenever considering a personal loan, sit down and write down all you expenses and income sources before taking the leap. Once you are well aware of your budget and of how much you can pay, then you will be in the perfect position to determine the payment period of you personal loan, as well as the amount to ay every month.

And don’t forget: Interest rates are not always set in stone. You will be surprised at how much negotiation power you can have when asking for lower interest rates on a personal loan, especially if you have a good credit score.

5- Do you know the real cost of your personal loan?

Before the decision to get out a personal loan is made, be aware of all the costs involved in acquiring that personal loan and make sure you are ok with them.

In many cases, most banks and financial companies will charge quite high interest rates on personal loans, masking them under deceivingly small monthly instalments. Knowing this, always be sure to ask for the total annual rate and to multiply it for the persona loan amount and for the number of years that you have to pay it. When you reach the final number you will be surprised at just how much a simple personal loan can cost you. Sometimes, taking on less instalments that will cost you more each is better than just stretching your personal loan for dozens of months.

6- Consider paying off your personal loan using automatic charges:

Let’s say you already acquired your personal loan and you have committed to pay on a monthly basis. The big problem with this is that unless you are a extremely committed and punctual you risk failing on your monthly obligations.

This is where linking your monthly payments to your debit card or bank account is a very convenient idea. By doing this, all of your monthly payments towards your personal loan will never be out of date and you won’t risk harming your credit score.

And there you have it. These are just a few of the many things to consider whenever thinking about getting a personal loan. There are many more factors of course and you will also have your own personal reasons and circumstances, but always consider all factors thoroughly and choose thinking in the long term as well.