Guide to Personal Loans

It seems like it is getting easier and easier to get in trouble when it comes to financial issues these days and our needs and wants are not getting any simpler! Tuition fees/food/rents are skyrocketing like crazy and better, grander gizmos/clothes/cars are popping out from every direction! What is a simple employee with a meager pay have to do to be happy or to pay the bills these days, right? Easy, get a personal loan! Personal loans can be life savers and the cause of your death so you better think hard about the following before you grab your coat and head to the nearest bank or lending club:

  1. What do you need the loan for? Is it absolutely necessary?
  2. If it’s not “absolutely necessary” (i.e. car, gadget, phone, etc.), will you be able to make good use of it?
  3. Can you save up and wait a little bit longer for it?
  4. How much do you earn? Can you stomach paying for the interest?

If you answer “to pay for my mortgage” or “to pay for my sister’s tuition for the university”, and “definitely yes” to question number one, don’t dash out to the door to get a loan right away. You have to know about your options.

Banks are not the only ones that can offer you loans for such cases or any kind of loan for that matter. One option would be what the financial industry call “peer to peer” lending, in this arrangement, network is key. You need to know who among the circuit offers the best rates and you also need to know a lot of people who can attest to your good records. The requirements maybe very strict on this one and it may be hard to find the right people in the beginning, but once you get into the circle and you are able to prove your good records and clear intention on paying back, you will be set. Not a lot of people know about this option and clearly, that is a shame. Peer-to-peer lending offers the lowest rates and are flexible on debt consolidations. The requirements vary from every individual or group that are willing  to give out loans, check for local lending clubs in your area to know more about the requisites.

We need to ponder more on questions 2 and 3 for a bit. We all have our wants and we all have our dream (insert very unnecessary luxury here), but the question is: will you be able to make use of it for the longest time if not forever? Or you will you just get sick of it after a couple of months? Until then you will still be paying for it. If it’s not a real good invest might as well just ditch the idea of owning whatever that is or save up for it and see how it feels to throw away hard earned money. People always mistaken material gain for happiness and this usually ends up in an unending debt cycle. Be cautious when buying things you don’t really need because they may make you very happy now but they can cause future headaches and a whole lot more.

Question number 4, how much do you earn?  This is where being mature about your finances should kick in. You have to ask yourself, “do I know how to budget my money?” and if so, “do I follow it?” This is not a very popular question to the impulsive buyer and the hoarders of unnecessary things but as I said, this is where being mature about your finances should kick in. Money and finances are not to be dealt with lightly and are not child’s play. If you have a fairly good record when it comes to budgeting and allotting payments for so and so, go ahead, avail a personal loan but if not, you might not want to get one if you can’t even make your money last ‘til the next payday. Budget your money wisely for everyday and every month so that you will be able to keep track of your bills and payments. If you are opting to get a personal loan for that new tablet PC, divide its cost plus the monthly interest to 30 days and see how much it will cost you every day. If you think your salary can cover for it go ahead. If not, try to look the other way when passing by the tablet PC store next time.

Some people avail loans with all intentions of running away from it. They think it’s their gateway pass to getting what they want or covering for what they need. This is where they are wrong. Sure it’s easy to ignore the notices and the phone calls, but your records in the loaning industry will be tarnished and the only ones who will be willing to give you a loan are those companies that give astronomical rates. This may be an exaggeration, but it has its dose of reality.

 

There are a lot of options in getting a loan these days, all you need is to think hard about what you are getting the loan for and being on top of your payments. In the loaning business, a good track record can go a long, beneficial way!

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