As much as we don’t want it to be, loans are a very real fact of life. If you ever find yourself looking up loan, there are some very important questions that you need to ask yourself before you secure a personal loan. That’s what we’ll be digging into today.
Why am I borrowing money?
Before you even think about getting a loan, you need to be clear on what you intend to use it on. The idea of “in case of a rainy day” is a terrible reason to get a loan. There must be a determined purpose for your loan because you will be asked for it. A lending company will want to get a feel of your financial literacy before they allow you to borrow from them.
If they see that you’re only borrowing for the sake of borrowing, you’re more than likely get turned down.
How much will I borrow?
Once you’ve determined what you need the loan for, it is important to come up with a concrete amount. When you establish an amount, it’ll be easier to establish your lender profile. It also should be able to give you a realistic view of what you can and cannot afford to borrow.
Having a clear amount in mind will also help narrow down your choices for a lending company. You can start to shop around using their interest rates in order to determine what will be the best fit for you.
What type of loan will I get?
Yes, there are several types of loans. This is something that comes as a shock to most people. What you will normally come across is the concept of an unsecured loan. This is where you borrow an amount without having to put anything up as collateral. It is usually paid off in installments to a predetermined schedule as dictated by the lender.
Before you finalize the idea of getting a loan, you should look into the different types of loans. These will be:
- Secured loans
- Fixed Rate loans
- Peer to peer loans
- Variable Rate loans
It is important to remember that each type has its own pros and cons. This is why it is important to arm yourself with necessary knowledge before committing to a loan.…