There are various reasons why people want to take a personal loan – consolidating their debt, funding their dream wedding, or renovating their home, for example. Whatever your reason may be, getting access to the needed funding can help to accomplish your goals much faster.
There are many loan products to choose from, so weighing your options carefully is crucial. Picking the wrong one can hurt your credit score, get your application rejected, and put you in financial distress.
Follow our tips on what to do and what not to do when choosing a personal loan.
DO
- Apply for the amount you need. Create a budget to plan how you want to spend the money. Avoid borrowing too much and trap yourself in unnecessary debt.
- Compare different personal loan products. Different loan types have different requirements and features. Instead of settling for the first offer, apply for the one that fits your needs.
- Check your eligibility. If you’re being denied a loan, the request is recorded on your credit report and can decrease your credit score. Therefore, make sure to only apply for loans you’re eligible for.
- Know what you want to spend money on. Don’t apply for a loan just because you can. Having a specific goal makes it easier to decide on the right borrowing amount and take the correct type of loan for your needs.
- Plan for the repayment. Make sure your monthly cash flow can cover your monthly repayments. Reduce the loan amount or extend the loan term if needed.
DON’T
- Rush the research process. We can’t stress enough that picking the wrong loan can hurt you in the long run and cause financial stress. It’s essential to make the time to consider all the available solutions and compare them based on your needs.
- Ignore the fine print. Always read and understand everything you’re going to sign!
- Miss payments on your loan. This should go without saying, but it’s a common problem where people forget to pay off their debts on time. Set up an automatic bill payment or (at the very least) an alarm so you don’t forget.
- Neglect your existing debt. When looking for a loan to consolidate your debt, don’t ignore any current repayments you have. Doing so can damage your credit score, lowering your chance of getting approved for a loan.
- Apply for multiple loans at once. Having multiple new loan applications appear on your credit report can make you an unattractive candidate. What’s more, if you get rejected numerous times, your credit score will take the brunt.
Consider getting in touch with Southstead Finance Broker Perth to make your loan application journey easier. We will help to compare different personal loan types from reputable lenders across the country and narrow down the options based on your budget, requirements and objectives. Contact us on 0408 238 981 or amy@southstead.com.au.
Credit Representative 525543 is authorised under Australian Credit Licence 38928. Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
