Borrowing money is no simple matter. When your financial circumstance requires you to take out a loan, take it seriously because one wrong move, one wrong mistake can lead to years of suffering from the consequences. In the spirit of promoting responsible borrowing, below are top tips to keep in mind if you do decide to apply for a personal loan anytime soon.
Do your homework
Never shop around for a loan unprepared. If you want to know the best options for your particular needs, you need to do your homework. Research, at the end of the day, is the key to finding the best loan deals in the UK. Start by first assessing your needs then determine whether a secured or unsecured loan is more appropriate for your case. Continue to trim down your choices until you find a deal that suits your needs to a tee.
Take advantage of comparison sites
You may also use top comparison sites. Just make sure you only rely on websites with a strong track record. A good comparison site does most of the brunt work for you. They research and scout the market for the best loan deals then comes up with a top ten list you can choose from. Comparison sites make it easier for you to compare key factors such as interest rate, loan amount, repayment terms and other such things.
Use loan calculators
If you’ve decided with the right type of loan and you want an accurate estimate of what the loan will cost, you can use loan calculators. Most providers have it in their websites so might as well take advantage. You can also request for quotes from your top lender choices so you can trim down your options further.
Compute your debt-to-income ratio
This part is a bit more technical but it’s one of the best gauges if you’re ready for a loan financially. What you need to do is figure out your debt-to-income ratio. There are handy online calculators you can use for this. If your ratio is at least 1.0, you’re in for some good news because you are in a good financial position to take out a loan. A ratio below 1.0 means it might be better to put off the loan at the moment.
Create a solid repayment plan
If you do decide to continue with the loan, you need a solid repayment plan. Otherwise, you may end up like most borrowers are in now – drowning in debt because they weren’t responsible enough to take their borrowing seriously. Only when you have a solid repayment plan can you ensure that your debt won’t go out of hand.
Borrow only what you need and can afford
This part is common sense but most borrowers still miss it. To avoid any financial complications as a result of irresponsible borrowing, follow the simple rule to borrow only what you need. You should only borrow more if you’re sure that doing so is cheaper in the end. It also follows that you should only borrow what you can afford. Make sure your loan is in sync with your budget for a hassle-free borrowing.
Commit to pay on time
Once approved for a loan, there is really just one thing to do now as a responsible borrower. Stick to your repayment plan. This means you committing to pay your loan on or before your due date every month. Keep at it until the end of the loan and you might even see a significant improvement on your credit score if you have a bad one to begin with.