Money is hard to find. You’ll never know, in just a blink of an eye, your wallet will suddenly turn into a barren wasteland in just seconds. That’s why loans are here to save the day in case of emergency. There are plenty of ways to garner extra cash in times of need. But most of us turn to loans as a last resort since this is a much easier way to do so.
Keep in mind that loaning is just borrowing money, and there will be a monthly interest that piles up as time goes by. Failure to repay the loan is a recipe for disaster and may take a toll on your credit rating. So before you get excited on getting your own personal loan, here are a few pointers you should consider.
Before anything else, it all boils down on how important it is to take that loan. Question yourself if you really do need the loan for emergency purposes or you’re just getting it because you’re going to splurge on something you don’t really need. Your decision matters the most when getting a loan and it’s crucial that you have to make the right choice to avoid getting regrets later on.
Interest Rate Matters
There are people who just take a loan without minding the interest rate and regretting it for later. Remember, the interest rate of a personal loan is much higher compared to a standard mortgage. Sometimes, the numbers can go up to 24% per annum for banks and 48% per annum for licensed moneylenders. That’s why personal loan is a much bigger risk compared to traditional mortgage. To save yourself from trouble, it’s better to pay your loan on its due date if you had the money.
Your Credit Score is Important
Most of the time, licensed moneylenders will check your credit score before approving a loan. If you don’t know it just yet, credit score determines your ability to return the loan at a certain period of time. The higher the score, the easier it is to get a loan. Low credit scores will result in rejection, so it’s essential that you improve your credit score before getting a personal loan. Assuming that you are approved on getting a loan, get yourself ready for sky-rocketing interest rates and special terms and conditions.