It would be good if all our financial problems were solved without the need for loans, but there are certain situations in which personal credit can not escape.
In case of unforeseen issues related to health or even the purchase of higher value goods, the loan can be a good alternative. Even so, it is necessary to know how to identify the right time to ask for it so that there is no lack of control over finances. In addition, it is good to know to decide for the credit that is most appropriate to your need.
With that in mind, we list some aspects that should be looked at before you take any loans. Keep an eye out and find the best time to apply for personal credit. Come with us!
Evaluate your financial condition
Before taking any loan, evaluate your real financial condition. Survey your debts, check your bank statements, and list all your income. Also, define the reason you need the loan (clear the name on the square, set up your own business, travel, buy a good and other reasons). If you do, honestly respond to yourself: Do I really need this credit? Is there no other way to solve the problem?
Check for other solutions
As we say, loans should only be taken in the last case, when the other alternatives are exhausted. Before taking any loan, see if there are no other exits!
Consider using your financial reserve because it serves to amortize the impacts of unforeseen events, as well as being a means for you to achieve your goals. Other good options are the sale of goods and the reprogramming of the budget. If you cut the superfluous expenses and temporarily lower your standard of living, the loan may not be necessary.
See if you can manage the loan
It’s no use making a commitment and not honoring it. Loan is serious and you need to know how to manage it. Research the conditions offered by banks and financial institutions, compare the Total Effective Cost of loans, simulate how much you will pay per month, and see to what extent the loan compromises your budget.
Do not forget that while you are paying back the loan, the essential expenses will continue to exist. So, calculate everything! Put the food, transportation and living expenses at the tip of the pencil and see if you can reconcile these expenses with the loan installments.
Be careful not to accumulate high debts
If you are paying for car installment, home financing and even taking out other loans, be careful! This may not be the best time to get a new debt. You will hardly be able to 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 inevitable, choose the loan that offers the lowest interest rates. It’s no use getting a new loan to help you clear 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 payroll deductible credit, which is deducted directly from the payroll. In addition to being more economical, it is more debureaucratized. Plus, just keep your feet on the ground!