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A personal loan can help you bring you one step closer to your dream holiday, taking a course in whatever interests you, consolidating debt and paying off for your special day. However, don’t let a few bad borrowing choices leave you with a bad credit rating. Let a personal loan become something of a convenience rather than a nuisance by keeping these four essential tips when it comes to avoiding making poor borrowing choices.
Scope the competition on interest rates
It all ties in with knowing what you want from your loan, you might have a set goal in your head, but you also need to know what is available to you on the market. Choosing a loan type along with the interest rate can mean the difference of you paying interest of 14.99% or 5% a year. It all depends on how you enjoy the sound of saving.
When it comes to your finances take your time on deciding. Try avoiding making a decision when you are pressed or financially stressed. If that is the case speak to a financial advisor who will help you look at your financial situation with a sober mind, and will help advise you on which path to take. We couldn’t stress how essential it is that you always compare interest rates when shopping for a personal loan. Never settle for the first offer that comes your way.
Be aware of hidden fees
Now that you have compared and found a good personal loan with an amazing interest rate, you will have to consider the fees that come with it. It’s advisable not to accept loans at face value as some have a honeymoon period that start of with almost 0% interest on them for a period.
However, once this time is up you will be slapped with hefty interest rates that can choke you financially. As a consumer you will have to learn to use your vocal chords and ask. Check to see if the features of the loan are suitable for you and your current financial situation.
Will you be able to meet payments for the whole period of the loan? What are the hidden fees that come with the loan? Ask until you are fully satisfied that all your queries have been met.
There’s much more to it than comparing costs
Paying attention to the overall cost of your personal loan is essential, but that’s not the be all and end all of what you should consider. Other factors you will have to consider is the customer service and the overall experience that your lender offers you, or else you could be stuck in a nightmare.
Check to see if the lender you are opting to go with is a reputable lender that is registered in the state in which they operate their business. Scammers have gotten smarter, and knowing how to catch their sneaky tricks is important.
The last thing you want is someone making a quick buck at your expense. See what other customers are saying about the Personal loan provider you are thinking of going with to avoid frustrations in the long run.
The right way of consolidating debt with a personal loan
Using a personal loan to consolidate debt is not uncommon in Australia. When you are considering consolidating your credit card debt you will have to change your spending habits. Failing to do so will be like you going to the gym, but binge eating on junk food straight after a workout. It will get you nowhere. You will have to adjust your spending habits by cutting out unnecessary purchases that you put on your credit card.
In the end, be honest with yourself. Ask yourself if you really need a personal loan and are you willing to be committed to it for the set period. There will be some spending habits you will have to adjust, but overall it will be worth the investment.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.
The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.
