It would be nice if all our financial problems were solved without the need for loans, but there are certain situations in which we cannot escape personal credit.
In the event of unforeseen issues, health issues or even the purchase of higher value goods, the loan may be a good alternative. Even so, it is necessary to know how to identify the right moment to request it so that there is no control over finances. In addition, it is good to be able to decide on the credit that best suits your needs.
With that in mind, we have listed some things to consider before you take out a loan. Keep an eye out and find the most appropriate time to apply for personal credit. Come with us!
Evaluate your financial condition
Before taking any loans, evaluate your real financial condition. Raise your debts, check your bank statements and list all your income. Also, define the reason why you need the loan (clear the name in the square, set up your own business, travel, buy a good and other reasons). That done, answer yourself honestly: Do I really need this credit? No other way to solve the problem?
Check for other solutions
As we often say, loans should only be taken in the latter case when the other alternatives are exhausted. Before taking any loans, make sure there are no other outlets!
Consider utilizing your financial reserve because it serves to offset the unforeseen impacts as well as being a means for you to reach your goals. Other good options include selling goods and reprogramming the budget. If you cut back on unnecessary spending and lower living standards temporarily, the loan may not be necessary.
See if you can manage the loan
There is no point in making a commitment and not honoring it. Loan is a serious thing and you need to know how to manage it. Research the conditions offered by banks and finance, compare the Total Effective Cost (CET) of loans, simulate how much you will pay per month, and see how much the loan compromises your budget.
Do not forget that while you are repaying the loan, the essential expenses will continue to exist. So calculate everything! Put food, transport and housing expenses on the tip of the pencil and see if you can match these expenses with the installments of the loan.
Be careful not to accumulate high debts.
If you are paying for car installment, home financing and even paying off other loans, be careful! This may not be the best time to get a new debt. You can hardly honor all these commitments unless you have a high salary and a good financial reserve. The most likely to happen when high credits are accumulated, is to turn the situation into a snowball.
In any case, if the loan is unavoidable, choose the credit that offers the lowest interest rates. There is no point getting a new loan to help you pay off old debts if the Total Effective Cost of the new loan is high, outweighing the cost of old debts. One of the best alternatives is deductible payroll credit, one that is directly deducted from the payroll. In addition to being more economical, it is more bureaucratic. No more, just keep your feet on the floor!
So, did you like our tips? Have you used them to identify the best time to borrow money? Share with us your opinions!