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Do You Really Need That Loan?

Nowadays it’s so easy to get your hands on credit! If you want access to a loan, you can probably have the money in your account in less than 48 hours. The turnaround times are quick and the process is hassle free. Let’s face it, lenders out there are more than happy to grant you a massive amount of money in no time at all, but before you jump at the offer, you should really be asking yourself a few tough questions. Sure, it’s easy to get your hands on the quick money, but are you prepared for the long repayment haul?

Before applying for a Personal Loan ask yourself the following questions:
  • Are you able to make it without this loan?
Why exactly are you taking this loan out? You need to be truthful when answering the question. Sometimes it makes perfect sense to take out a loan, but all too often we fall into the trap of loaning money just because we have “things” we want to get our hands on. If you are looking to take out a loan to fund a holiday, or to buy unnecessary stuff, you need to reconsider your decision. There is a difference between a ‘need’ and a ‘want’. Wanting extra stuff is going to lead you down a slippery slope to financial disaster.
  • Can I afford to pay this loan back?
Loaning money is the easy bit. Being able to commit to paying the money back, with interest, over a period of time, is the hard bit. You need to check your budget. Do you have a couple of thousand Rand spare in your budget to pay back this loan? You know the state of your personal finances better than anyone. If things are too tight and that loan repayment looks like a long shot, do the smart thing and don’t take out the loan!
  • Are you getting the best possible deal?
Are you getting the best Personal Loan deal available to you with the best possible terms? There is no harm in shopping around before you commit. The terms of the repayment and interest charged should be key in your decision making. Remember that this loan could possibly be payable over a period of 5 years, which is a serious commitment. Be confident you have made the best choice before putting pen to paper.
  • Are there any other options available to you?
You are probably looking to apply for a loan because you just don’t have the money to either get through the month anymore, or there has been an unexpected event that has come up which you didn’t make a provision for. The question you need to ask yourself before taking out the loan is:
“Is there anything else I can do before committing to this loan?” Have you revisited your budget and made sure there isn’t anything else you could have tweaked?

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The iHound