3 Things to Look Into Before Applying for a Personal Loan*

There is a high possibility in your life, due to the current financial climate, that you may need to apply for a personal loan. Be it for a car, home appliance or just because you can’t keep your head above the water, it’s not something you need to be ashamed of as you can get some great rates on personal loans that could help ease any money worries you have. I had to take one out a few years back to cover legal fees and these are a few things I had to look into before settling on the loan that was right for me;

What Type of Loan Are You Wanting?
When you’re first looking into taking out a loan, you may end up completely overwhelmed as there is so much financial wording surrounded all different types of loans so you really do need to thoroughly research before signing anything. Are you going for a secure or unsecure loan? A short term loan? A consolidation loan? If it’s a first loan, or you’ve had trouble getting a loan in the past, it may be worth looking into loans for very bad credit. In fact taking out a loan and paying it back promptly and on time each month can actually help improve you credit score! It’s important to ensure you get more information before you apply for any loan.

How Does Your Credit Score Look?
Speaking of credit score, how does yours look? If you haven’t checked it might be worth getting a credit score report so you can see what you’re working with. There are websites online that can compile you one and it will be beneficial in the future and when applying for a loan. How healthy your credit score is does actually affect what kind of loans your eligible for, and the interest you’ll have when you pay it back so keeping it in the green is paramount. Your credit score can be affected by things such as changing your address, paying mobile phone bills on time, paying off store cards and along with any past loans or credit cards you have. Having a good credit score is also important if you’re wanting to take out a mortgage in the future.

Can You Pay It Back?
Finally, but probably, most importantly, are you in a position to pay your loan back, and most likely with interest? If you’re not you may need to look into other avenues such as taking on a second job or borrowing from a family member as if you are unable to pay your loan back you will end up in a worse position. Looking at your current savings, and what in goings and out goings on your checking account is a clear indication as to whether or not you can afford loan repayments. It’s also important to look at the long term such as job security, if you lose your job, how will you pay off your loan along with trying to afford the cost of living?

These are all important points to consider before you sign off on a personal loan. Sometimes you have no option and a loan would help out in the short term, but make sure you think of the long term before you take one out.