Terri Ramsey Beavers Whether you need it for an emergency expense, want to treat yourself to something nice, or have to buy something that you can’t afford to pay all in one go, such as a new car or a new computer, borrowing money can be the answer. Today there are several options available when it comes to borrowing money, depending on what you need it for, your personal credit history, and your current financial situation. Whether you’re going for a new credit card, a car loan, or are looking into personal installment loans, there are several important things that you’ll need to take into careful consideration before you go ahead.
#1. Interest Payments:
When you borrow money, it’s not just the original loan amount that you’ll be required to pay back – you’ll also need to repay interest on top of this, which will vary depending on the type of credit that you are borrowing. It is possible to get a low-interest rate, or you could have an interest-free repayment period with certain credit cards, but this is not always the case. Interest rates can make borrowing an expensive move, so it’s important to determine how much interest you will be repaying over the course of your loan or credit card and make sure that this is something that you are comfortable with.
#2. Your Financial Situation:
Secondly, consider your financial situation before you commit to borrowing any money, whether you’re getting a credit card or looking at online installment loans. Work out your income and regular outgoings and make sure that after repaying your monthly payment, you will still be able to cover all of your priority bills and have some money left over. Otherwise, you could find yourself in a sticky situation where you are needing to borrow more money to cover the cost of repaying your last loan, which will land you in even more debt.
#3. Potential Credit Damage:
Every time you borrow money, there is a chance you will damage your credit rating, so it’s important to be aware of your credit score before you begin. Knowing your credit score will also give you a better idea of whether or not you are likely to be accepted for a loan or credit card before you begin applying. And, since your credit score affects almost every aspect of your financial life, it’s important to make sure that you’ll be able to continue protecting and building it.
#4. Do You Really Need It?
Finally, consider whether or not you really need to borrow the money before you apply. If you’re borrowing to fund a large purchase, this could be something that you’re able to save up for in just a short amount of time. Although it may mean waiting longer before you get what you want, the wait can be worth it when you don’t need to worry about repaying a loan. Or, you could borrow money from a relative or friend if you are sure that you’ll be able to repay them and avoid putting any stress on your relationship.
Borrowing money is commonplace today and often essential, but consider these important factors before you apply for any kind of credit, whether it is installment loans, credit cards, or payday loans.