3 Great Times to Take Out a Personal Loan: A Beginner’s GuideJuly 11, 2019
Taking out a loan is often the first step you have to take when making any type of significant financial investment. A loan will ensure that you have the resources to take on whatever it is you want to.
This can be anything from buying a house, starting a business, or investing in a shared venture. However, it’s essential that you be sure you have the potential to pay it back without putting your financial status at risk for years to come.
Therefore, you should be able to figure out when to take out a loan so you don’t risk jeopardizing yourself in the process. That said, here are three examples of the best times to take out a loan:
- When you can get a loan deal at a low-interest rate
Like everything else in life, there are good and bad times to take out a loan, so it’s imperative that you know how to choose the right lender and when you should do it. It’s always better to look for a loan with a low-interest rate, as that will ensure that you don’t have to spend too much while paying it off.
You should keep in mind that some loans that have low-interest rates might offer less money. If the total amount of money is enough for you to do what you want without putting too much stress on your shoulders, that’s usually a win in our book.
Paying off your debts on time will help improve your credit scores, which will also allow you to take out larger loans at a better interest rate in the future.
- When your loan will generate more money than the instalments plus interest
If you know that you can generate revenue from the money, then it’s often the right decision to take out a loan. However, you have to always keep in mind that nothing is guaranteed and you need to minimize the risk as much as you can.
You need to think of the worst case scenario and make sure that you will still be able to pay off your debts should the worst happen. Come up with a plan A, B, and C for all of your finances so that you don’t put yourself at risk of going bankrupt.
This is something that every mortgage loan commercial always tries to tell you, as every investment comes with its own risks. For this reason, you need to do your research and find out the best ways to pay off your debt.
- When you are in immediate need of money to pay off an emergency expense
If you need a large sum of money to cover an emergency expense, you can consider taking out a loan, but keep in mind that there are consequences to this. These cases usually don’t have a payoff, so it’s imperative that you ensure that you can repay your debts with the income that you have.
For example, if your relative has fallen ill and they don’t have conclusive health insurance, you may have to take out a loan to help him. You should know that the interest rates for this type of loan are usually quite substantial, which means that you have to pay it off as soon as possible. If you fail to pay on time, your credit score can take a beating, which means that you won’t have a good foundation for future investments.
If you’re looking to take out a personal loan in South Africa, Hoopla Loans is your best option. Get in touch with us today to see how we can help.