Swati Arora

Lifestyle - Writer
New Delhi - India

    Girls: Important Questions to Ask Yourself When Considering Taking Out a Loan

    January 31, 2017

    Loans can be a total lifesaver in times of need, and many people need them for different situations. However, it’s always worth thinking long and hard before taking out any type of loan. It isn’t a good idea to make lending money a habit, unless you want to make repayments for years and years to come. Ask yourself the following questions before you take out a loan, so you can decide whether getting one is right for you:

    Image Author: Flickr

    Why Am I Getting this Loan?

    There are a variety of reasons you might want to take out a loan; home improvements, consolidating debts, or perhaps you’ve seen a gorgeous Mulberry bag that you just can’t live without. We’ve all been there. However, getting a loan in order to buy certain things might not be the best route to take. You might get addicted, and rack up a lot of debt - and I’m sorry to say it, but you can’t depend on all of those amateur modelling jobs you’ve got in the pipeline to pay them off. If you can’t afford a Mulberry bag or Jimmy Choos, don’t buy them. It isn’t worth getting into debt for! The reason you’re getting this loan needs to be good enough to justify paying it off for years - can you live with the hassle and expense? If the answer is truly yes, (you may need to do some soul searching) then you can go ahead with the loan.

    Should I Get a Secured or Unsecured Loan?

    A secured personal loan means that your loan will be secured on your property. If you can’t pay the loan back on time, then you could end up losing your home! What’s the point in having a stunning designer bag if you both haven’t got anywhere to live? Unsecured loans usually have high interest rates, and are typically harder to get, especially if you’re looking at poor credit loans. This decision can depend on what feels right for you, and how much you want to borrow.

    What Will the Monthly Payments Be?

    The shorter the agreed loan term, the higher your monthly payments will be. Would you like to be stuck with a loan for a long time, paying off less, or pay off a loan over a shorter period of time, paying off way more? You need to weigh up the pros and con, take a look at your monthly schedule (could you still afford that regular body massage as well as this loan repayment?), the total amount of the loan and how long it’ll take you to pay it back. Try to go for the shortest length of time possible and still be happy with the monthly payments, as a general rule.

    How Long Will I Be Paying off This Loan?

    Can you seriously cope with having this weight around your neck for months, or even years? Whether you’re financing that cute little Beetle convertible, or you want to renovate your kitchen to rival Kelly Hoppen, you need to realise that this is a long term commitment. You’ll probably end up resenting making this decision if you’re paying it off for too long. It’ll seem worth it at first, and you’ll feel excitement when it’s time to drive round to your friends/family’s homes and show off your new wheels, but when all that’s over, you’re stuck with a high monthly payment that means you can’t enjoy your monthly pedicure/eyelash tint/waxing session. Is it really worth all of the hassle?

    What If I Want to Pay The Loan off Early?

    There might come a time in the agreed loan term where you can afford to pay off your loan early; whether you’ve decided to sell that Mulberry bag on eBay, or perhaps come into some money from your great aunt Nettie. The only problem is, you can sometimes get penalised for paying your loan off early. I know, it’s scandalous. You might have to pay for the privilege of paying off your loan early - who would have thought it? Make sure you know the exact terms and conditions of any loan you consider so you can make an informed decision.

    Have I Read the Small Print?

    Come on girls, I know this takes up a lot of your precious time when you could be watching ‘Friends’ reruns, but it’s very important. Pull out your Sherlock Holmes style magnifying glass and read the small print as carefully as you can. Ensure that there are no clauses that lock you into things that you don’t want to be locked into. Ideally, you’ll find a loan that won’t penalise you for paying it off early, as mentioned before. Obviously, most people take out loans with the belief that they won’t be able to pay it off early, but you might end up pleasantly surprised.

    Ideally, we shouldn’t take out loans at all, but they can be a great help if we need assistance with cash flow and the big stuff in life - like somewhere to live! However, if the item you’re considering taking out a loan for can wait for a while, then you need to put it on the back burner to avoid getting yourself into big debt.

    You definitely don’t need a loan to go on a dream holiday, to buy designer shoes, or to purchase extravagant pieces of jewellery. If you want to do this, then you’ve got the wrong idea of what life is about and need a little help with your money management skills! This will end badly, make no mistake about it. Simply save the money, and you’ll appreciate the item much more. If you aren’t willing to save for it, then it can’t be that important to you in the first place.

    Have you asked yourself these questions before compare loans? If you’ve asked yourself the questions and answered them truthfully, you’ll end up with the best possible decision you can make. Save up for the shoes and you’ll appreciate them much more, girls!

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