A loan can be great help. It can assist you in achieving your goals faster, such as buying a house, purchasing a new car or getting your business up and running.
However, there are many considerations to make before taking on a loan as choosing the wrong loan can cause financial and legal havoc down the track. Take note of the following tips before applying for a loan:
How much do I need?
Before applying for a loan, carefully calculate how much assistance you need. The more you borrow, the more you will have to pay back in interest and fees. Calculate the benefits from saving for an extra month or sixth months and consider how this will impact on the loan you need. The amount you need may limit you to applying for only a small number of loans with stricter conditions.
Which loan to pick
Consideration needs to be awarded to working out which loan is best for your needs. Some loans only allow you to spend money on set things, e.g. student loans may prevent you from using loaned money for rent.
Loans have different terms and conditions. There are a number of fees that may be hidden in the fine print. Speak to your accountant to help you understand what these conditions mean for you to avoid getting caught out on choosing the wrong loan.
Can you afford the repayments
There is no point taking on a loan if you can’t manage the repayments. This will only see you fall into debt, which can impact on your business, your assets and your credit rating. Don’t jump at the opportunity to receive a substantial loan without appropriate calculations to ensure you are more than capable of making the repayments.