Precautions to take when making a personal loan
Before taking out a loan, evaluate your options and research the offers available on the market – in addition to the cheapest options – at lower interest rates. Talk to your bank manager to see what they can offer you, but also do a search for other banks.
Currently, there are also several tools that help consumers to find good loan options at lower rates. If you have a good credit score, you may find even better options.
Want to find out if you have a low credit score? So take the time to click here and read an article on the topic.
Watch out for scams
When it comes to taking out a personal loan or other type of loan, it is essential to know prices and the functioning of the loan market in order not to fall into a trap. Do not despair and do not be tempted by any miraculous offer that may possibly be offered to you.
Watch out for scams from shell companies – especially with online loan sites and apps. In some cases, malicious people create ghost companies to receive money from third parties without offering you the purchased service.
Therefore, research the financial institution in which you are interested in taking out a personal loan and be wary of any company that asks for a cash advance to cover fees or other charges – as this practice is unusual.
Compare the Total Effective Cost
To take out a loan, from your accounts first. Check values and terms for payment of the new debt and check if the offers offered make sense to you – identifying and comparing, mainly, the Total Effective Cost.
Comparing the Total Effective Cost of the operation includes identifying and checking the charges charged by the bank – such as taxes, fees, insurance, registration opening. Take all this into account – and not just interest – when calculating the Effective Cost of the deal, in order to find out what is most profitable for you.
Read the contract carefully
It is important to have access to the information contained in the contract and read it very carefully before taking out a personal loan – in order not to encounter any surprises along the way. Thus, you are aware of all the information related to the loan itself, readjustments, cancellations, among others, and reduces the chances of being caught off guard in the future with any changes provided for in the loan agreement.
Plan the payment
Planning how you will repay the loan is essential. You need to have complete control over your finances and financial obligations so that the loan does not become a burden or an additional debt in your budget.
Look for portions that do not exceed 15% of your monthly income. Also, try to make a plan, so that you have control of your finances and keep your commitment to repay the personal loan.
Take care of finances
Having control over your financial life is essential – especially for those who do not want to take out a personal loan or any other type of debt. By taking care of your finances and having good financial planning, you end up having a greater flow of money every month and are able to make better choices regarding your money.
In addition, planning financially and setting up an emergency reserve is a decisive step towards escaping debts and financial difficulties, avoiding taking out a personal loan and moving towards your financial freedom and independence.
An easy step to start taking care of your finances and avoiding taking out a loan is using the monthly expense spreadsheet. Don’t know how to do yours yet? Don’t despair: click here and learn how to make good financial control spreadsheets.
By applying these tips in your daily life you will be able to take out a personal loan more smoothly whenever necessary and you will also learn to take better care of your money over time to avoid going through financial constraints in the future.
What about you, do you have other care suggestions that you should take when taking out a personal loan? Then share them with us!
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