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Starting the year afresh means getting the opportunity to have a do-over with your finances. If you have taken out a personal loan or planning on doing so, these handy tips will prove useful when it comes to being able to manage your personal loan.
Know your why
Knowing the reason behind why you currently have a personal loan or planning on taking one out is essential. This can help you gauge if you need the loan or not. It can also let you know just how much you will need to borrow to avoid biting off more than you can chew. Questioning why you need a loan can help you ask those tough questions such as whether you really need a personal loan to sort you out. Confused about your why? You can speak to a financial advisor or broker to find out what your options are.
Check your credit score
A new year's resolution that you can make while the year is still young is to check your credit score before making financial moves concerning loans. Experian found that 65% of Australians never checked their credits score. Before approaching a lender to make sure to check your credit report to see if taking on a personal loan will help or damage your finances. You can get access to a free credit report each year. It can also give you adequate time to check for errors or arrears that need to be fixed before approaching a lender. Keep in mind that the more that you apply for a personal loan in a short space of time can have a negative effect on your credit report.
Borrow what you need
When applying for a personal loan a lender will approve you for a certain amount. If you have a good credit score you may be approved for more than what you have initially asked for. According to research by Rate City, Aussies borrowed $8,59 billion in personal loans. However, before you accept the offer it is vital to check that the loan amount you are receiving is something that will meet your needs. Furthermore, check to see if you will be able to pay back the amount. Taking more than what you need can easily lead to a debt spiral. This is why the first point is vital. Remember to always compare loans before signing on the dotted line.
Know your numbers
Staying on top of your finances means knowing your numbers. When it comes to being able to manage a personal loan it is important to think long term. Check the ongoing fees and charges that come with it, the interest rate, and penalties that come with it. Will you be able to meet repayments for the loan term that the loan offers? Always question if you will still be able to afford your loan if it were to increase by 1%-2% to see if it is affordable for you.
Make it your mission to meet the loan repayments on time, and to pay off more than the minimum whenever you can.
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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.
