7 Questions to Answer Before Getting a Personal Loan
Taking out a personal loan is an important decision. Before taking out a loan, there are a few questions that you should ask yourself. These questions will allow you to decide whether a personal loan is right for you. Let’s get right in!
7. What Is My Credit Score?
For lending companies to loan money, individuals must have a certain credit score. Typically, if you have a credit score below 600, it is difficult to obtain a personal loan. As your credit score gets higher, you are more likely to qualify for a personal loan. Additionally, people with higher credit scores will have significantly lower interest rates. Make sure that you know the credit requirements of your lender before you apply.
6. How Much Money Will I Be Borrowing?
It it important you know just how much money you will be borrowing for a personal loan. For instance, if you’re looking to start a business, tally up all of the potential costs. From there, you will be able to borrow the right amount of money to fulfill your goals. Remember, don’t borrow too much money just to have it. Interest rates can be high, meaning that borrowing more than you need could handicap you financially.
5. How Long Will I Be Making Payments?
Before getting a personal loan, you should know what your repayment term is. A repayment term is the amount of time that you will be repaying your personal loan. Depending on your personal goals and how much you can afford each month, determine the length of time that is right for you. In general, shorter repayment terms will typically be less expensive in the long run, however they carry higher monthly repayments. Longer repayment terms typically are more expensive, but they have lower monthly payments.
4. Can I Afford A Personal Loan?
One of the most important questions to ask yourself is whether or not you can fully repay a personal loan. All too frequently, people will take out a personal loan, despite the fact they are just making ends meet. From there, they struggle to repay their loan, and their situation spirals downhill. To make sure this doesn’t happen to you, take a look at your current financial state. How much money could you afford to borrow? Could you consistently make full monthly payments on time? These questions will allow you to determine if you can afford a personal loan.
3. Why Am I Taking Out A Personal Loan?
Knowing why you are taking out a personal loan is an important step in the process. Ask yourself, “What will I use the loan money for?” This is one of the first questions that lenders will ask, making it important to know. Additionally, you can determine if the personal loan that you are seeking is a need or a want. Here are some situations where taking out a personal loan from Courtesy Loans is necessary.
- Medical Emergency
- Student Loan Repayment
- Starting A New Business
Meanwhile, using personal loan money to purchase a brand new sports-car is likely not a necessary reason to take out a personal loan.
2. Will I Have A Co-signer?
Co-signed loans are becoming more popular. Whenever you co-sign a loan, you make an agreement with another individual to equally pay off a personal loan. Co-signing is particularly ideal for individuals with lower credit scores. Co-signing may improve your chances of getting a loan accepted, while also having lower monthly payments. Be sure that your lending company allows co-signing before applying for a personal loan.
1. Will This Personal Loan Help Or Hinder My Goals?
Whenever you take out a personal loan, that loan should help you accomplish your goals. Unfortunately, for many people personal loans often end up being a handicap, hindering the very aspirations that the loan was supposed to support. That’s why it’s important that you look at the previous questions on this list and determine if a personal loan is the right decision for you.
Hopefully, you now have the right information to make an informed decision about getting a personal loan.