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What to consider before taking out a loan?

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Posted: 20th March 2024
Last Updated: 14th March 2024 at 12:54
Courtney Evans
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1

Check your Credit

You are more likely to be approved for a loan if you have a good credit score first and you will also be able to qualify for lower rates too.

If your credit score is low then start by improving this by paying off debts.

 

2

Consider your budget

Can the loan repayments fit comfortably into your monthly budget?

If no, then it may be worth rethinking.

Be realistic when looking at your budget and don’t miss anything out. You should be aware of what your finances are before thinking about taking out a loan. If you loan repayments only just about fit into your budget then this may not work and you could struggle later down the line.

3

Factor in the interest rates

Include the interest rates when you work out what your monthly repayments will be as this is part of the overall cost and will help you to budget.

4

Don’t borrow more than necessary

Before taking out a loan figure out exactly how much you need, not an estimate. If you borrow too much than needed you will be paying back more than necessary and could cause more harm.

5

Compare loan offers

Make sure to shop around for the best loan offer, check the loan terms to determine how long you have to pay it back as the longer the term the smaller the monthly payments can be, although this means higher interest rates each month too.

Decided if you want a secured loan or a personal loan when looking at the offers.

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