Do You Think Before You Take a Personal Loan?
Taking out a personal loan can be the best way out of many problems, financial difficulties, the market downturn or even to get immediate capital and invest in the growth of your business.
However, before you do so, you need to understand more about this financial product, ensuring that you do not fall into any pitfalls.
Do I really need to take a personal loan? What criteria should be analyzed before closing the contract? Thinking of helping with this task, we have listed some details that can go smoothly when applying for your personal loan.
Map your spending
Before you take out a personal loan, evaluate your expenses and see where you can cut unnecessary expenses for the moment.
Even if you are unable to save enough to remedy your current situation, you will need to over cash at the end of the month to pay off the agreed loan. A good tip is to try to reduce the number of trips to restaurants or to buy cheaper brands on the market, for example; These two expenses are the ones that weigh the most in the Brazilian budget today.
Evaluate the objective of getting a loan
Identify the reason why you need this loan. It is of utmost importance to be clear about the real need for such hiring.
If you want to use it to buy a car, pay for a trip, or have a surplus of money to make unplanned purchases, there is a great risk of getting yourself into a very complicated financial situation.
Now if the reason for the loan is a overdraft or credit card debt renegotiation, then interest rates may drop to less than half.
Another acceptable reason for using a personal loan is to settle family health issues, for example, to undertake or renovate your property. The bottom line is that a thorough analysis must be done before making such a commitment.
But don’t you know the difference of getting a loan online or at the bank? We explain here. If you opt for bank loan it is super important that you know which one is best so that you do not get off to the detriment, just click here.
Overdraft is a Personal Loan
Many do not realize this, but the famous Overdraft is also a type of personal loan. In this case, you will have a pre-approved credit in your account, meaning if you go into red, the Overdraft credit will cover future expenses automatically.
Although it seems practical and quick, this is not the smartest way to use a personal loan. Interest on overdraft can be very high, and since there is no control whatsoever, you can wind up further and get more headache.
But for that we also give tips on how to get away from overdraft and its interest.
Lower interest rates don’t always mean the best option
It is common that when applying for a personal loan, people pay attention only to the interest rate charged. While extremely important, it is not just this fee that will influence how much you will ultimately pay.
Some institutions may charge several other built-in fees, so you need to compare CET – Total Effective Cost. CET is a tool that considers all the costs of a loan. Institutions are required to inform the CET of their loans.
Read the contract
This last tip may seem somewhat obvious, yet many people sign a contract without reading all the clauses. Not everyone has a habit of reading everything they sign, this is where the danger lies.
Whether it is from everyday rush or overconfidence, this is a mistake that can cause a lot of headache; Reading the contract is critical – and mandatory – so there are no surprises along the way.
Check the contracted rates, the fines that may apply, the deadlines, finally, clear all doubts, especially items that were not so clear.
By signing the contract, you are agreeing to all the terms and conditions contained therein, so be very aware of all these tips to avoid unpleasant surprises.