The loan is a convenient and often very necessary and useful thing. The money is constantly being spent on different things, and often it is impossible to save enough sum quickly to buy something expensive. Therefore, a loan is a good option not to postpone the purchase. But before you take on any additional financial obligations, you have to think very carefully and weigh everything up.
We have prepared 5 main rules for you, which will help you to take a loan correctly
RULE NUMBER ONE. Common sense and smart calculation
The term “impulse purchase” is well-known in professional trading. Shops make every effort to make sure that their visitors under the influence of emotions made more and more purchases. Everybody had a situation when they went to the store only to see prices for something and went out with an unplanned and unneeded purchase.
What pushes us to buy it? The answer is simple: marketing.
Smartly organized sales, polite sellers, even nice music and smells in the shop affect us and we take out our own money without thinking.
This is often how people spend all the money they have in a purse, and sometimes even from someone else’s, borrowing from friends or taking a loan from the same store. Remember, any serious expenses from your pocket, and especially borrowed from someone else’s pocket — should not be a one-minute decision. If you want to buy something, go home and try to postpone the purchase until the next day. Maybe tomorrow you won’t need to buy that at all.
RULE NUMBER TWO. Clearly define the purpose of the loan
As one of the most important rules, we should note that the credit should be taken on something extremely necessary for you, urgent, and not just on a new “toy” (freshly new phone, “miracle” vacuum cleaner, etc.). After all, life is unpredictable, and due to various circumstances, you can suddenly lose your job, income and, as a consequence, stop being able to keep paying the loan.
Everyone, even very successful people, has the risk of disability of paying the loan. So always think about whether it is worth it before you take the loan for any purpose. Do you need it now and should you make long-term financial commitments for it?
RULE NUMBER THREE. Loan payments should not exceed half your monthly income
Some economists may disagree with such a simplified approach to loan evaluation. But our goal is to provide the most adapted option that everyone can understand, especially since many banks use this assessment before issuing a loan.
So make sure that the amount of money you pay for all your loans is not more than 1/2 of your monthly income.
RULE NUMBER FOUR. Get maximum information
Once you have chosen where to get the loan, be sure to ask for a payment schedule and detailed requirements for borrowers. Read the proposal carefully before you make a final decision.
Ask more questions about the terms of the loan: interest rate, commissions, the possibility of early repayment for it, methods of payment.
This will help to avoid many potential troubles and problems in the future.
RULE NUMBER FIVE. Find out the exact amount of overpayment on the loan
Interest, commissions, insurance — this is the total fee for the fact that you can use the money taken on the loan. It is defined as the overpayment of the loan — the most important indicator that you should pay close attention to. It is not necessary to complicate your life with your calculations, multiplying the interest on the loan amount, summing up the commissions, etc. Ask for the expected payment schedule — it is easy to calculate the amount of overpayment (just sum all payments according to the schedule and subtract the amount of the loan taken).
Keep in mind that the real payment schedule at the time of receipt of the loan may differ from that given to you at the time of prior consultation, so before signing the loan agreement, check the final payment schedule with the original one.
These are the main rules that, in our opinion, should be followed when obtaining a loan
Of course, someone may disagree with them, but these rules are revealed from our own long-term experience of loaning, they are not mandatory and are written only to help you.
We hope our publication was useful to you!