Getting a personal loan can be a trial, as it’s difficult to know where the pits are. But, there are four common mistakes we all make.
You find yourself needing to apply for a personal loan. A new car, or a holiday, or you want to consolidate your existing debts? There’s a lot to consider.
Avoid the following four common mistakes, and you’ll be more likely to get a better loan with better terms, that will serve you better for a longer period.
1. Biting off more than you can chew
If a bank or other financial institution is offering you a million dollars for a loan, you don’t have to accept it. Getting your loan needs to be what you set out to do, rather than getting hungry when you suddenly have the option of borrowing enough to own the latest sleek, sexy and stylish German sports car that you saw at the movies. Be sensible and know your limits.
2. Not shopping around
Finding a loan with agreeable interest rates and payment terms is easy to find, but applying for a loan on the spot because it looks good is a pretty good way to find yourself in financial trouble down the line. Shopping around is the key. Consider several factors when getting a personal loan, like penalties for late payment, charges for getting overdrawn, or perhaps knowing what other people have gone through – so look for genuine references and testimonials. Invest time now, save yourself stress later.
3. Agreeing to whatever you’re asked
Financial institutions are bound by law to act in certain ways. But there are always going to be lenders who will do all they can to squeeze every cent from you, especially if you just accept what they offer. Some will offer repayment terms that may look good, but might be irresponsible. Keep in mind what multiple banks and loaners are offering, and compare and contrast their terms, their interest rates, and if what they’re going to be asking is what you can afford, both now and in the future.
4. Not checking your credit rating
Your credit rating (you have one) determines how a lender is going to see you. Have you raked up thousands in credit card debt? Do you have previous loans? Did you pay your credit cards off on time?
But loans or debt in the past aren’t necessarily a bad thing; how you went about paying them off makes the biggest impact. Find out your credit rating and see how your financial decisions in the past will influence your future.