3 Questions to Ponder on Before Applying for a Personal Loan

December 23, 2020

Life is filled with unexpected twists and turns. As a result, you may find yourself in situations in which you need more than just your monthly income. Everything in life costs money, and a simple emergency can turn your world upside down. Even life’s best planners can sometimes end up in desperate situations, all necessitating an alternative pool of funds. 

Thankfully, there are ways to accommodate such occurrences. Whether you’re trying to make ends meet for an unexpected expenditure, consolidating a medical emergency debt, or simply wish to plan for investment, personal loans are the perfect solutions. 

Personal loans are essentially money borrowed for personal use, no matter what it may be. They’re often sourced from consumer finance companies, which can be packaged in lump sum payments. These are also usually repaid in fixed interest rates, done in a set time. 

Although personal loans are highly attractive, all loans must be met with caution. To help you fully understand and analyze if a personal loan is for you, here are the three most important questions you need to ponder on:

Question #1: How is my financial standing? 

All financial decisions need to be thoroughly researched and analyzed, as any wrong move can compromise their overall financial health. With all things considered, make sure to check in where your bank accounts currently stand. You need to examine your entire financial history, as this allows you to gauge how much you’ll be able to borrow. 

This will also help you know if you can meet the requirements, as certain lenders can be extremely stringent on the protocol. As you examine your financial history, make sure to study your expenses and annual income. Any debt must also be taken into account, as well as your credit score and report. 

Question #2: How much money should I be borrowing?

Borrowing limits are always in place, but the minimum and maximum rates are always set depending on the lender. You’ll also be limited to your personal loan limit, which is determined by your credit score and reports. If you need to borrow a large amount of money, but your credit scores do not reflect good numbers, the lender will have all the power to limit what you can borrow. 

Being able to borrow a huge amount of money should not be an invitation as such, however. It’s important to remember that personal loans must feel secure on your end, confident that you’ll be able to repay in time. Never overestimate your repayment capabilities—this may hurt your chances in the long run.

Question #3:  How long will I be given to pay off the personal loan?

While it can be incredibly tempting to simply just take out a personal loan, make sure to familiarize yourself with the terms. You need to double-check the amount of time given for repayment, as it can range anywhere from a year up to thirty years. This part of your loan will also discuss principal and interest payments, helping you determine if you’re truly fully capable of repaying.

Work With The Best Loan Provider

Personal loans are undeniably some of the best ways to get some extra cash, especially when you need them the most. Used responsibly, they can easily unburden every financial worry. In the end, personal loans also make for an incredible way to build your credit scores, and not just for when you need some extra funds. As you begin your financial journey, make sure to keep these questions in mind. A little knowledge goes a long way—especially if you’re making decisions for your financial future.

If you’re on the hunt for quick online personal loans in South Africa, Hoopla Loans has you covered. We are one of the fastest-growing online loan brokers, offering you smart online loan application systems for world-class conveniences. Allow us to make loans attainable and repayment terms highly doable. Apply for a personal loan today!