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Thinking of taking out a loan? Here's what you need to know

Taking out a personal loan is a risky but viable option when you find yourself in a cash crisis. A loan can be a lifesaver if you’re able to pay back the money of course.

There are various kinds of loans available, including debt consolidation, personal and fixed interest loans to name a few.

A debt
consolidation loan
is perfect if you’d like to settle other debt, whereas a personal loan is designed to aid you financially if you need to borrow money to purchase something, for example, to pay off university fees, or if you need some money for your child’s school supplies, etc.

You could also take out a
15 % loan
which offers you a lower interest rate and fixed monthly repayments despite fluctuations in the economy.

If you are considering applying for a loan in the near future, here are a few handy tips to get you started:

Understand your budget. When applying for a loan, the most important decision will be the amount of money you’d like to apply for and conversely how much you’ll be paying in monthly instalments. So you need to ensure you’ll be able to pay these off– even on those months when you’re feeling the pinch.

Ensure you don’t have outstanding bad debt. If you’re applying for a personal loan, you need to make sure to check your credit score. This should actually be done before you apply at the bank. If you have a bad credit score, your bank may decline your loan application.

Read the fine print. It is so easy to simply sign off your signature, declaring that you agree to the terms and conditions of the loan… but what if you don’t? By reading through these t’s and c’s, you’d find out what the bank’s terms are and can decide if you are comfortable being held to those terms.

Don’t apply for too many loans. So often, people find themselves having to pay off credit cards, clothing accounts and loans from various companies. If you’re already paying off a loan from a particular company, you’d have already left a ‘footprint’ on your credit record which banks can see. Pay off one loan first before you apply for another.

Applying for a
personal loan
can be tempting, but it is important to first make sure that you’ll be able to afford the monthly instalments.

If you can’t, it will affect your credit score negatively.



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