5 things you need to know before getting a small loan
A small personal loan can be a quick, convenient option to pay an immediate expense, like a medical bill or car repair, if you don’t have emergency savings or alternative ways to cover the expense. Here are 5 things to know before you take out a loan, so you know if it’s the right decision for you.
1. Why you need the money?
One of the consequences of living in a consumer society is the need to buy things that are not always necessary for us. Knowing why you need to borrow money, to begin with, is the most critical factor you need to consider before taking out a loan. Just because you need a bit of extra cash, that does not necessarily mean that you need to borrow thousands.
2. How much you can afford to borrow and payback
Now that you’ve determined why you need the money and that getting a loan is in your best financial interest, you’ll need to think about how much you can realistically afford and payback.
If you want a loan, you’ll need to start thinking about the loan process from the lender’s point of view before you take out your calculator, familiarize yourself with a few key questions: Can you pay back the loan? Will you pay back the loan? What are you going to do if you can’t pay back the loan?
3. Interest rates and other fees
Once you’ve figured out how much you need to borrow and how much you can afford to pay back each month, you can start shopping for personal loans. True affordability is a factor of both the personal loan interest rate and the personal loan payments over time. Even a loan with a low-interest rate could leave you with monthly payments that are higher than you can afford.
When you’ve found the best interest rates, take a look at the other terms of the loans on offer. Look out for fees and penalties that make it harder for borrowers to pay off their personal loans. Prepayment penalties that charge you for making extra payments on your loan. Stay away from loans that come with exit fees, a fee some lenders charge you after you pay off your loan.
4. Small loans can be a lifesaver when you need cash quickly
If you find yourself in need of cash due to unexpected bills like a medical emergency or a leaky roof, you may quickly consider using your credit card but that can be very costly. At the same time, you do not have time to look into taking out a loan on your home. This is where a small loan can come in handy. The funds are usually accessible within two weeks of applying which is not as fast but may make more financial sense.
5. Banks aren’t the only option
Low credit scores are a concern for some lenders, but banks aren’t the only lenders out there. Alternative and private lenders are often able to offer more flexible terms, including which level of creditworthiness they can approve. While traditional banks may be restrictive when it comes to obtaining credit, there are alternative options
One of the options is Pocket Money which is the world’s first global online marketplace to connect borrowers with lenders. Pocket Money Company based in Singapore https://www.pocketmoney.credit/ helps borrowers to connect with leading companies around the world, breaking the barriers that prevented them from borrowing money from a competitive global marketplace.
Lenders will gain access to a larger pool of potential borrowers by revenue-sharing with the lending business located all over the world. Focusing on micro-financing,
Find out more about Pocket Money and watch a video: