Are you thinking of taking out a personal loan? If the answer is yes, ask yourself these questions:
- Do I really need a personal loan?
- Is this purchase necessary?
- Can I afford to take out a personal loan?
This is probably the most important question you will have to ask yourself. A loan seems great until repayment time comes. Sit down, take a look at your budget, and make sure you can actually afford to pay the lender back. Once you'd decided that you do need a personal loan, make sure you know the answer to the following questions.
How much should I borrow?
Most lenders offer a cheaper APR on a larger loan, and each lender offers different levels of interest rates that can change depending on how much you borrow. Sometimes it's best to up your loan just a small bit to get the best interest rate.
Will I be covered if I become ill or unemployed?
Most lenders will have a Payment Protection Insurance plan (PPI), but check the policy carefully and ask questions. As not all these policies will cover you, they can be expensive. Sometimes, it's best to shop around for a different policy.
Can I pay my loan off early?
Yes, you can! Most people do, but check with your lender as some add penalties for paying off your loan early. Some lenders charge two or three months' interest.
What happens if I get turned down for a loan?
First, ask why. It could be that your credit rating is poor, or that you are asking for too much money. Make sure you can afford to take out a personal loan and get all the facts before signing!