When taking out a loan, whether it is a payday loan, business loan, or any form of short term loan, there are certain things you should avoid, If you want to make the most out of your loan, and don’t want to end up paying back far more than you should, follow this advice and you should find yourself in a position where you can borrow money, alleviate any financial pressure you may be experiencing, and get back on track, hassle free.
Don’t Jump Straight in: Browse the Market
We have all been there, we need cash fast and simply want to get the job done. Even so, there is no reason that you should accept the first loan offered to you! If you are offered a loan surprisingly quickly, this may also be a red flag, so always compare the various loans available to you through loan comparison sites. Always shop around before you commit. Loans are available from banks, credit unions and online lenders, so scope out the market and find the best loan suited to your personal financial situation before deciding to commit. Additionally, all lenders will evaluate applications differently, using different parameters. Some will base your suitability for a loan based on your current affordability, whereas others may undertake accredit check. Take all these factors into account before accepting a loan and signing an agreement, and you will be able to enjoy your loan to the fullest, hassle free.
Don’t Go All In! Take What You Need
As tempting as it may be, we sincerely recommend that you don’t take out the maximum loan possible. Just because you can afford it, doesn’t mean you should borrow it. A loan payment may seem manageable from the offset, but you may find that this is a big mistake down the line. It is recommendable that people should not take out any form of loan payment that accounts for more than 5 – 10% of their monthly budget. Once you’ve added up your monthly expenses, you may find that overborrowing could well be just as dangerous as paying for something that you just aren’t able to afford.
Don’t Get Sloppy with Payments
Keeping up with your payments is essential to not just your financial health and personal welfare, but also your credit score. By scheduling automatic withdrawals or monthly reminders to pay off your loan, you can do yourself a lot of favours down the line. Your loan payment history accounts for 35% of your credit score.
By missing payments or making late payments, you are putting your credit rating at risk. This can prove to be detrimental, as you will find it difficult to get approved for loans, credit cards or even property rentals down the line. It’s a vicious cycle if you aren’t careful! You can set yourself up for success now by simply setting up a recurring payment or making an urgent note in your calendar. The power is your hands, you’ve just got to use it correctly.
