Taking up a personal loan might seem like an easy task. And there are in fact, a few financial institutions, who provide easy personal loans. But, still, there are a few questions that you need to ask yourself. Here are those –
1. Why do I need the Loan – Determine why you need the loan. Do you have any special task? Maybe you need it for consolidating another debt, or for an emergency purchase or an emergency work or for home improvement. But, whatever it is for, a clear purpose will make you feel sure about taking up the loan. Other decisions also become easy to make such as how much you are going to borrow or whether or not you really need the personal loan.
2. How much do I need to Borrow – The amount of personal loan matters a lot. One of the biggest reasons behind the same is because you have to ensure that you are able to pay your debt on the given time. Do not take up a loan amount you cannot really afford to pay on time. When you are sure, talk to the bank personnel and discuss over the matter.
3. How much can I afford – When you decide on the loan amount, you then need to think about how many monthly instalments can you afford? Always keep in mind that the bigger the loan amount is, the higher the monthly repayments. Here is how you can determine how much you can afford –
• Review your financial plan and monthly cash flow.
• Figure out if you usually have money left over after you cover your bills each month.
• Identify how much you can devote to covering payments on a new debt.Recognize the amount you can dedicate to covering instalments on another debt.
• Look for territories where you could bring down your expenses and make more space in your financial plan before looking for an individual loan.
• Measure your requirement for an individual loan against other financial goals.
• Weigh different costs or goals against your requirement for an individual loan to choose which decision matches your priorities.
