What You Should Consider before Borrowing
If you are in need of some money and borrowing is the best option left for you, then you should read this before you borrow money. If you will be in hurry or take loans without thinking much, you will end up being in a chaos. The to-do list is not big and are simple to follow. Just you need to make sure of these and after debt life will be little easy and planned for you.
Understand the need
This is the first question you should ask – Is it necessary for you to take loan?. Well, i know there are a variety of circumstances when a loan is really required. For example, when you are in need of urgent money for some health related stuff or super urgent stuff, you may need personal loan. Or when you are buying a car or home, you may need a car or home loan. So, there is nothing bad in taking the loan when needed, only thing is you should be very much clear on the requirement of it.
Is the interest rate appropriate for your goal?
Interest rate play a major role on how much you will end up paying for the amount you have borrowed. For example, if you are taking a loan of $10,000 for five years with an interest rate of let’s say 12%. In this case you will end up paying $13.3k which is like a total interest of $3.3k. While let’s say you found a better rate of interest of 8%, the only interest you will have to pay is $2.1k in 5 years and that’s a 36% lesser than what you used to pay earlier.
And this is why, it is very important for you to find the best rate possible. If you have been successful in getting the better deal which fits to your goal, share your borrowing story with us here.
Have a plan to repay
Getting a loan or borrowing moneys is very easy. With thousands of companies working now in this small finance space, getting a loan is not that difficult. But paying is still the hardest. So, before even you think of taking a loan, have the plan in mind like how you will repay. Calculate the EMI you will have to pay monthly and how you are going to plan that money. Because even if you miss a single EMI, it is going to hurt badly to your credit score.
Is it impacting your future plan?
Well, no one like to borrow money unnecessarily but still if you need to do, think about if it will impact your future plans. For example, you need a bike and for this you are sort of money which you are planning to borrow. Now, as you need to pay the EMI regularly, that might impact your long-term plan like your kid’s education. So, you should understand the priority of the work as well.
This was a quick guide on what to consider before you borrow money. Summarizing the stuff, we need to understand the need, prioritize the stuff, and most importantly plan the repayment of the loan.