0

Taking out a loan is serious business, although many people don’t give it a second thought.  They treat it like it’s nothing, as loan companies make it so easy and hassle free to secure a loan and pay it back.  This is why you must have your wits about you if you’re thinking of taking out a loan.  Make sure you read the following information thoroughly and take it all in before you make your decision to take out a loan.

 

Do You Really Need a Loan?

You should never take out a loan on impulse.  You need to be sure that you really need a loan before you take one out.  In some cases, it’d be so much better if you could wait and save up the money.  Then you’ll save yourself a lot of interest!  If you don’t need the thing you’re taking out the loan for right now, then I suggest waiting and saving instead.  It’ll be worth it in the long run when you have more money.

 

Will You Be Able to Repay Your Loan?

You need to ask yourself this question and be honest. Are you seriously going to be able to repay this loan? Think of not only the money you’re borrowing, but the interest and any other charges too. If you can’t pay back a payday loan you could be in a lot of trouble. Is there anything that could go wrong to stop you from paying? Is your job secure? Take everything that could stop you from paying back your loan into account and work out what you’ll do in emergencies.

 

How Much Interest Will You Pay?

Pay attention to your interest rate, as this determines how much you’ll pay back over the course of your loan.  You could pay just a little bit more than you borrowed, or a whole lot more depending on the kind of loan you take out.  Try to understand what the percentages mean so you can make an informed decision.

 

Would it be Worth Taking Out More Money?

In some cases, it can be worth taking out more money than you originally intend, even if you don’t need it.  This is because the interest rate can actually become lower, meaning that you pay less back over the set amount of time.  Do the math and decide whether it’s in your best interests to take out more money than you planned for.

 

Is There a Charge for Early Repayment?

Some people would like to pay their loans off as early as possible.  Others come into some unexpected money and the first thing they want to do is get out of debt.  But have you considered that there might be a charge for early repayment?  You must know this before you take out the loan, so ask questions and read all of the small print you can find.  Some loan companies can be sneaky about this, but good companies like www.cashfloat.co.uk will be upfront with you and tell you anything important you need to know right away.

 

What’s Your Credit Score Like?

Your credit score will affect your ability to get a loan and sometimes even the interest rate.  If you have a bad credit score, you’ll struggle to get a loan from most companies.  If you have a good credit rate, it should be fairly easy.  However, remember that the more you apply, the more it can affect your credit score.  You don’t want to accidentally and unknowingly affect your credit score and end up unable to apply for other things.

 

Will You Need to Give Anything Up?

You should know your finances like the back of your hand before you apply for a loan.  Lots of people think they’ll be fine if they just wing it, but this can be dangerous.  You should know how much you have coming in and how much you have coming out.  Work out where you can cut back if you need to.  You may not want to, but you may need to give a few things up when taking out a loan.  By knowing your numbers, you should still be able to live comfortably and avoid being left in the lurch.  It could be a simple case of cutting the amount of cinema trips and meals out you enjoy.

 

Will You Still Be Able to Save Money?

I consider it essential that everybody save money, whatever their situation.  Everybody should have an emergency cash cushion to fall back on – you never know what might happen!  You shouldn’t touch this money ever, unless you have a genuine emergency.  Pretend it’s not there.  With this loan, are you still able to save money?  If not, you’ll need to think of a way around it.

 

What Happens if You Can’t Pay it Back?

Even if you think you’ll definitely be able to pay this loan back, you need to consider what will happen if you can’t.  Have a back up plan, no matter how unlikely it may seem that you can’t pay it back.  Do you have a family member who could help you out?  If not, will you get possessions taken away?  Be fully aware.

 

Have You Got the Best Deal?

If you’ve searched high and low for a loan, then you’ve probably got the best deal.  The best deal will give you the best value for money and interest rate.  You can only get this if you search properly and don’t just take out a loan blindly.

 

Should You Get a Credit Card Instead?

You may be opposed to credit cards, but it can be a good idea to get one of these instead of a loan.  Credit cards often come with 0% interest for a certain time, so if you can spread the cost of a buy over the term of the loan you could save a lot of money.

 

When you’ve considered all of the above you should be well informed enough to know whether you should take out a loan.