From home improvements to weddings, maybe even a special family holiday. Whatever the reason, a personal loan is an excellent way of financing those significant events life throws at us. For many, personal loans can seem like an intimidating thing, because in nearly all cases, you have to match the lender’s specific criteria to qualify for borrowing a sum of money. But, borrowing money doesn’t have to be as scary or as complicated as most people see it be. The most important thing to remember when applying for a personal loan is the affordability of repayments with your particular situation, never ever borrow more than you can comfortably afford to repay and always remember the interest rates! Today we have put together this article as a guide for the very beginner when delving into the daunting world of personal loans, and what you should consider before asking for one.
#1 – Consider what you are borrowing to fund.
Aside from mortgages and vehicle loans, most people will want to borrow a large sum of money from a lender to fund large projects like home renovations or luxury family holidays, even paying off existing debts and combining it all into one monthly payment instead of repaying multiple lenders. Unlike mortgages, these personal loans can be used for anything you wish. However, borrowing isn’t always the answer to everyone’s prayers, and it is essential to remember that whatever you borrow, you will need to pay back and most of the time this includes interest charges. So, before you apply for any personal loan, try to consider whether this project or purchase is really necessary and whether you could instead save your money each month until you can afford it.
#2 – Always use reputable lenders
Do your research! Speak to friends and family members for advice and ask for their personal experiences or opinions on which lenders to use before applying. Many people make the mistake of not shopping around enough before applying for loans and credit, not realising that it’s just as important as making any other big purchase like buying a house or car. Always make sure to use a reputable loan provider and compare different products that you will qualify for. Pretty much every lender will have various offers on the market and like any other businesses will compete with one another through appealing interest rates and discount charges on their products. Some lenders will only consider people with flawless credit ratings, in turn providing lower interest rates and generous offers, whereas other providers may be willing to lend to people who don’t have a strong credit history although the borrower could incur higher product fees.
#3 – Keep an excellent credit score
Building and maintaining a brilliant credit rating can take some time, but it is one of the most important things you can do in your financial life. It really does pay off to keep a record of strong credit history. Different lenders will use this information to form an opinion of what you are like as a borrower and whether you are making repayments frequently and on time. Please be aware that each and every company you apply with to seek credit in one form or another will leave a visible mark on your credit file for up to 6 months. If you are denied credit for whatever reason, this also will leave an alert on your visible credit history which future lenders will have access to and could play into consideration when making their decision of whether you qualify to purchase one of their products. You can build an impressive credit score by always keeping up to date with repayments, making early repayments and not applying for too many credit products such as loans, cars, cellphone contracts and insurance products over a short period of time.
#4 – The advantages of taking out a personal loan
There are many positive aspects of borrowing through a personal loan. The main reason people apply is due to receiving the funds reasonably quickly after applying, quite often this is within 2-3 working days depending on the provider. Most commonly, the interest rates of the products are usually fixed so you won’t have to worry about facing any hidden charges. The process of applying for a personal loan is often quite straight forward and relatively flexible, with most lenders offering a variety of products, so you have multiple options to choose from. Many providers will have some sort of online tools such as a calculator which you can adjust to view different amounts of credit and repayment options, this gives you the benefit of choosing a cash product which will best suit you and your personal situation.
Always remember to do your research before applying to any sort of credit.
