Understandably, we all have the desire to purchase an expensive item from time to time, for instance, buying a new car. But not everyone can afford to pay a hefty sum upfront in cash. Most of us will take up a loan which is the most viable option. Before signing on the dotted line, you should bear in mind that you should only borrow what you need, and do not get carried away and fall into the pitfall of over-borrowing. You should take some time to evaluate your options carefully and consider the following factors.
Do I Really Need the Loan
You should seriously think twice before deciding to take a loan. Is it a need or a want? Will you be able to repay the loan later on? You have to ensure that you have exhausted all other viable options before considering getting a loan. If you have carefully evaluated all avenues and getting a loan is the only option left, then the next step is to look for a licensed moneylender which provides competitive rates.
Review Your Financial Status
Before applying for a loan, it’s crucial to review your financial position. Make a list of your income versus all your monthly expenses to get a good picture of where you stand. In this way, you will know how much you can afford to repay monthly if you decide to get a loan. Look into your short and long-term capabilities. For instance, if you are a salaried worker with a secured job, you would feel comfortable repaying a loan over a few years as there is a fixed source of income but on the other hand, the same strategy might not work out for a self-employed person as there is no steady source of income.
Do not over-borrow
Do your math and you won’t fall into the pitfall of overborrowing. Most people get carried away when getting a loan as the loan amount is based on guesswork. Avoid falling into this trap by calculating the exact amount of money that you need. For instance, if you are getting a loan to purchase a car, approach the car dealer for a detailed breakdown of the car purchase price. In that way, you can easily calculate the loan amount that you need. Bear in mind that you don’t need to borrow the maximum loan offered by your licensed moneylender based on your eligibility.
Repayment Capability
If you default on your monthly repayments, you could end up with a huge amount of debt within a short period. If you have healthy financial habits like not spending lavishly on daily necessities, keeping track of your monthly bills, setting aside the monthly repayments on loan, and still have savings – then you are on the right track as you would be a good paymaster.
Backup Plan
Be sure to scrutinize the loan terms and conditions in-depth to understand their implications in case of default payments. Double-check with your licensed moneylender if in doubt. In most cases, late payment fees will be imposed and this will affect your credibility as well. For secured loans (loans taken against an asset) such as a car loan or mortgage loan, the licensed moneylender has the right to seize the said asset.
That’s why it’s always good to have a backup plan in case you fall behind on your repayments or stop paying altogether for some reason. Can someone help you out financially temporarily? Or do you have anything that can be used as collateral as a last resort? These measures can be a real lifesaver if something unexpected happens.
Knowledge of loan schemes
Read up on the different types of loans available and understand the terms and conditions for each type of loan. Then make an informed decision on a suitable loan scheme based on your financial and personal needs.
In conclusion, consider all your options carefully and if all else fails, and you need to get a loan from a licensed moneylender, make sure that you do your homework in selecting a suitable loan for your specific financial needs. Do approach Soon Seng Credit for a personal consultation session today to discuss your loan needs to ensure that you get the best deal in town.
