Like any other major decision making, applying a loan also requires a lot to cogitate. Weighing the pros and cons before applying a loan will prevent us from being buried in debt for the rest of our lives, and we know the heavy feeling of carrying the burden of debt.
Questions to ponder are: How much will it cost me? Am I capable of paying the loanable amount? Is it a good or bad debt? Is it a need or a want? These are just some important points to consider when applying a loan.
HOW MUCH WILL IT COST ME?
It wouldn’t hurt if we start calculating the estimated amount of how much the loan will cost us in the end. On the one hand, unsecured loans such as Cash advances or Payday Loan will cost us more since it has higher interest compared to other loans. On the other hand, it is preferable during emergency cases since it does not require collateral for loan and or other long application procedures.
AM I CAPABLE OF PAYING THE LOANABLE AMOUNT?
Always consider your capacity to pay your debt. Never loan an amount that you are not capable of paying especially when the loan has high interest rates. Fervently set limits on how much to borrow and set the boundaries of spending within your means.
IS IT A GOOD OR BAD DEBT?
A debt is considered good when we use a loan for business or make the money productive. It is considered bad when we apply a loan to pay for another debt and further lead us to more debt.
IS IT A NEED OR A WANT?
Making an impulsive decision will not be of help when applying a loan. We need to make sure that when we apply for a loan we know where the money is going. Setting a ‘loan goal’ will help ensure whether we really need to loan or we are just driven by our want to have instant cash or property. Without a ‘loan goal’ your loaned assets will later become a liability.