3 Factors to Consider When Obtaining a Loan – Our Guide
January 02, 2020The economy in South Africa has been quite tough over many years. For this reason, there are financial repercussions that many individuals face. In fact, statistics show that the country’s Gross Domestic Product (GDP) has shrunk by 2.2 per cent in this year’s final quarter. It is also expected that the GDP is going to drop in the new year. By now, only 65 per cent of South Africans are able to pay their rent on time, and there are still other glaring financial situations that many South Africans are facing today.
Given this harsh reality, obtaining loans is a viable solution to overcome certain financial difficulties. More and more people are now taking out loans to cover their financial needs and get by, whether it’s a short-term or long-term loan. Know that there are various types of loans that you can resort to, from payday loans to personal loans. While there are benefits that you can get from a loan, you should also strive to obtain the right loan and be able to pay this back in the long run.
That said, below are three vital factors to consider when in the process of obtaining a loan. Keep on reading for your financial guide and reference.
1. Timing
Timing is everything, even when it comes to finances. In fact, time is a primary factor to consider when you’re looking for the cheapest loan. For one, the total Annual Percentage Rate (APR) that determines the loan cost, varies at different times of the year. The chances are that loan providers would base their rates on factors tied to the economy.
Secondly, the length of the loan should be deemed with the utmost consideration. Know that short-term loans tend to be less risky and easier to pay off when compared to long-term ones. This means that you have to consider what you’re getting yourself into and how you can pay in the long run.
2. Credit score
If there’s one aspect that you have to assess, that will be your credit score. Your credit score is indeed a vital link between you and your money. When obtaining loans, it is the most crucial aspect to evaluate because most of the decisions of lenders would be based on your credit score.
For this reason, you have to check and maintain your credit score from time to time. In the end, you don’t want to get yourself and the lender in unwanted surprises further down the line. As your credit score is your financial reputation, be highly realistic with your financial decisions, which includes getting loans.
3. Loan flexibility
The flexibility of your loan is one important consideration. No matter how you try to stay on top of your finances, there will always be financial situations that you are bound to face along the way. That given, make sure to know the terms of any loan you’re getting into and that they meet your personal needs.
Always choose a loan that is customizable to your needs. For instance, make sure that the payment schedule fits your scheduled paycheck. The same is true when enrolling in recurring payments for ease and convenience.
Obtaining loans is a way to help you get by for the next few days, months, or years. It is an excellent means to help you recover financially. However, there are a few considerations to make when taking the plunge into getting personal loans.
As outlined above, consider the timing, credit score, and flexibility of loans. In the end, loans are meant to help you with your finances and not put you in the bottomless financial pit.
If you are looking to take out instant loans in South Africa, get in touch with Hoopla Loans today to see how we can help.