5 Questions You Need To Ask Yourself Before Applying For A Loan
If you are thinking about applying for a loan, there are a few things to keep in mind. We’re bombarded with so much credit these days, it can be overwhelming, from auto loans, travel loans, credit cards, mortgages and student loans, almost everyone has some sort of debt or credit. So if you are thinking about applying for a loan for whatever reason, it’s important that you make an informed decision.
Before you apply, make sure you´re applying for a loan for the right reasons. It´s vital you explore your options, and that you know what to look out for when applying for a loan.
Here are five questions you should always ask yourself, before applying for a loan:
How much do I really need to borrow?
Before applying for any loan, ask yourself how much you really need to borrow. If the purpose of the loan is to purchase a particular item, for example, is it possible for you to save for half of the cost and then apply for a loan for the balance thus reducing half the amount you need to borrow?
Perhaps you need a loan for more time-sensitive reasons and therefore saving money in advance is not an option? In any event, always review your budget and make any necessary adjustments. Once you have an up-to-date budget, it’s easy to see how much money you will have available to allocate to loan repayments.
Do I have enough income to repay the loan plus the interest?
The first thing to be aware of when applying for a loan is that the required minimum monthly amount of your loan is not the total amount. In addition to the minimum monthly repayment, your loan will also be accruing interest. Depending on the loan, the interest rate will accrue daily, weekly, or monthly. With your revised budget, make sure that your monthly income is sufficient enough to repay at least the minimum monthly amount, and ideally, the interest accrued during the period too.
To explore the total cost of a loan, including interest charges and monthly payments, check out Ferratum´s online loan calculator.
If, after using the loan calculator and reviewing your budget, it appears you will be struggling to make your loan repayments, then perhaps taking on a loan is not the best idea for you right now.
How long do I have to repay the loan?
The loan term or the time that you have to repay your loan varies depending on the type of loan you apply for and the amount you wish to secure. This can range from weeks to months, so choosing a loan amount, loan term, and the associated interest rates according to your budget that suits you, is very important.
One thing to keep in mind is the ability to repay your loan early. Ferratum, for example, allows its customers to repay their unsecured loans without any early-repayment penalties. This option allows customers to make repayments based on their own budget and spending power, which, in turn, makes repaying their loan flexible and comfortable.
Make sure whichever financial institution you chose gives you the ability to repay early without incurring penalties so make sure that you educate yourself about your options.
How will I manage my other debts?
If you already have any other debts like a credit card or other loans, taking on more debt might not be a good idea as it will only result in you moving even further into debt (we all know why credit cards are bad - because it's so easy to stay in debt)
Before applying for a short-term loan, make sure you are currently making any repayments on your credit card and other loans comfortably. Does your budget allow you to manage another repayment?
Have I chosen the best institution for the loan I want?
There are plenty of financial institutions on the market offering short-term loan options including banks. In addition to their fees and terms + conditions, it’s important you feel comfortable with the financial institution you choose.
Make sure all fees are clear and the company is credible and trustworthy. Read online reviews from other users on a website like Trust Pilot to see which companies have a good reputation. The process of finding the right credit institution will help you feel more confident that your choice has been the right one.
At Ferratum, we believe in doing things differently. As an international pioneer in the field of financial technology and mobile lending, we have expanded our operations to 24 countries since 2005.
When you apply for one of Ferratum’s online loans, you can be confident you’re in good hands. We believe in complete transparency. No hidden fees. Our mission is simple – to provide the best, fastest, and most user-friendly lending service available in Australia with 24/7 personal customer service. Apply online in just minutes and receive the money you need within one day.
When it comes to money, with Ferratum, you’ve got one less thing to worry about