It is becoming more and more common request personal loans to meet different expenses or debts. But, when requesting one, it is necessary to take into account several aspects to choose one that does not end up turning the return into hell.
Do you know what are the things to take into account when requesting a personal loan? We discuss them below.
Points to keep in mind when applying for a personal loan
The personal loans are related to individuals, since they are a quick way to have money for any kind of need. However, it must be understood that the loan is actually a debt that must be paid in the short, medium or long term, which implies a monthly payment obligation.
This does not mean that it is bad to ask for a loan; in fact, there are many entities that offer beneficial conditions, but it is convenient take into account some aspects before making the final decision.
The amount you are going to request
When applying for a personal loan, you need to know the exact amount you need. One of the biggest mistakes people make is requesting more money than is really needed. And it is a mistake for two aspects:
- Because the money that is left over you are not going to use (or you should not).
- Because the interests, being a greater capital, go up, what you would be paying for a part of the money that you are not going to touch.
In this case our best advice is that you know exactly what you need and do not apply for a loan for a larger amount, although it sounds tempting and your head tells you several things in which you could allocate that money.
In this way, you will be avoiding borrowing or paying more interest.
How are you going to pay it back?
A loan does not mean that they give you the money and when you can, you return it. It does not work like that. For this reason, all banks recommend that, in addition to knowing how much money you need, you think about how you are going to be able to pay it back.
In other words, We are talking about how much money you can allocate to pay monthly to repay the loan. In this way, an assessment can be made to know the time it will take to pay everything, including the interest that will be higher as more time passes.
Keep in mind that, if you cannot repay it, you may incur defaults or arrears that will do nothing but increase the money you have to repay (and it will also be more difficult for you to apply for another personal loan).
The best is that try to return it as soon as possible because that way you will be able to pay less.
Do not be late
As we have told you before, arrears or defaults are paid, and can be very expensive. So, month after month, try to set aside the amount to satisfy the monthly installment of the loan and thus go up to date. If you fall behind, this will cause the loan to become much more expensive, to the point that it can be a burden.
Look at the APR
When hiring a personal loan, one of the most important terms for you is the APR, that is, the Annual Equivalent Rate. It is where how much the loan really costs you is included because It will have the commissions, interests and expenses that are added to the amount of money that you have requested.
To make it easier for you, imagine that you have asked for 1000 euros. And yet, the APR tells you that you must return 1200 euros. That is because to those 1000 euros they are adding interest, commissions, expenses, etc. that make you have to return more.
Do not keep the first personal loan
It is normal that, when you have a bank account and you do not get along badly with the bank, if you need a loan, you go to it to manage it. But today there are many products and entities on the market that can offer you better conditions.
That is to say, you should not accept the first offer they offer you but review several options to determine which one is best for you. For this there are comparators that can help you (although later it is convenient to go one by one verifying it because the conditions in the banks change a lot).
Do not be afraid to take a loan at a bank where you do not have an account. If it is worth it, it has guarantees and what they offer you is good, nothing has to happen.
Beware of “fast” loans
For some time now, some of the loans that are most seen and advertised are the fast ones, in which they hardly ask you for anything to demonstrate that you can repay the money.
As a general rule, Two of the documents that a bank asks you to assess the loan application are your payslip and your employment contract. The payroll because they want to know how much you earn and if you will be able to pay the money back; and the contract to see if it is indefinite or you can lose your job before paying off the loan with them (which is why they often ask for a guarantee).
But there are other entities that do not ask for anything and give it to you almost without explanation. What you may not know is that, for those loans, there are some interests and commissions that are much higher than in banks, and if you are not able to pay for it, they accumulate to the point where they become unsustainable.
Read the conditions of the personal loan carefully
Before signing the loan contract, read the conditions very well, everything it says (even if it is extensive and complicated to understand). It is convenient that, If a point is not clear to you, ask. We would even recommend you to record that conversation for what may happen.
In this way you will know what you are signing and everything you need to understand about that contract so that there are no surprises later.
Banks often provide copies of contracts for users to read carefully at home. But even so, on the day of the signing, go early to read the document you are going to sign again (you will make sure that it is the same as what you have read and that nothing has changed).
One piece of advice we give you is that, If you have to request a personal loan, make that decision well. If it is not essential, it is better not to do it because you will be “in debt” for a while and with an obligation to settle that pending account that can weigh down many other things.