If you are considering applying for a loan, there is nothing to be ashamed of. In fact, from car loans, credit cards, mortgages and student loans, almost all have debt or some form of credit.
So, if you are thinking about applying for a loan, it is important that you make informed decisions.
First, make sure you apply for a loan for the right reason. Secondly, it is important that you explore your options, and that you know what to look for when applying for a loan.
Before you apply for a loan, there are five questions you should always ask yourself:
1. How much do I need to borrow?
Before applying for any loan, ask yourself how much you really need to borrow. If the purpose of the loan is to afford to buy something, is it possible, for example, that you save half the amount together and apply for a loan that covers the other half and thereby reduce the amount you need to borrow?
You may need a loan for more time-sensitive reasons and it is therefore not an option to save money in advance.
Regardless, always review your budget and make any necessary adjustments. Once you have an updated budget, you will be able to see how much money you have available to earmark for loan repayments.
2. Is my income sufficient to repay the loan and interest?
The first thing you need to be aware of when applying for a loan is that the minimum amount to pay per month is not just a down payment on your loan capital. This is because there is interest on your loan, and depending on the loan, the interest is added daily, weekly or monthly.
With your revised budget, make sure your monthly income is sufficient to repay at least the minimum monthly amount, as well as the interest accrued during the period.
To explore the total cost of a loan, including interest and monthly payments, please see here.
If, after spending your budget, you realize that it will be difficult to make payments, it is not recommended to take out a loan.
3. How long do I have to repay the loan?
The loan period, or the time when you have to repay your loan, varies depending on the type of loan you are applying for and the amount you want to borrow. From weeks to months – choosing the loan amount, what the loan period is and what interest rate is the most important things to keep track of.
One thing that is good to look for is the opportunity to repay a loan earlier. Serratum, for example, offers its customers the opportunity to repay their loans in advance without any fee linked to early redemption. With this option, customers can make repayments based on their own budget, which makes the loan repayment more flexible and comfortable.
Make sure that whatever financial institution you choose gives you the opportunity to repay early without any additional fees.
4. How do I manage my other debts?
If you already have other debts such as credit cards or other loans, it may not be a good idea to take more loans as it will result in you being more indebted.
Before applying for a short-term loan, make sure that you are able to conveniently make credit card payments or any other loans. Does your budget allow one to repay?
5. Have I chosen the best institution for the loan I want?
There are plenty of financial institutions in the market that offer alternatives to short-term loans, including banks. In addition to the fees and terms available, it is also important that you feel comfortable with the financial institution you choose.
Make sure all fees are clear, the company is credible and reliable. Read reviews online from other users on a website like Trust Pilot to see which companies have a good reputation.
The process of finding the right credit institution will make you feel confident that your choice is the right one.
At Serratum, we believe in doing things a little differently. As an international pioneer in financial technology and mobile lending, we have expanded our operations to 24 countries since 2005.
When you apply for one of Serratum’s consumer credits, you can be sure that you are in good hands. We believe in complete transparency. No hidden fees.