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.