Facing money problems one after another may push you to get more than one PERSONAL LOAN or having to many CREDIT cards may encourage you to use several not knowing that it may put you in a mismanaged financial situation or worse, not being able to pay some of them at all. When financial problems like this come your way, one of the best solutions is for you to consolidate all or some of your debt into one. But, the irony of this is you would have to find a MONEY LENDER who will be able to give a loan that will be enough to consolidate some of your debts and at the same time give one with a low or at least manageable interest rate. There are things that you should consider before BORROWING MONEY to consolidate your debts.
Good Credit Score and Debt Inventory
Again, you need to borrow money to consolidate your debt and you can only borrow again if your credit rating or score is still good. Before looking for a low interest loan to consolidate your debt, make sure your credit score is still within the limit of lenders because if your credit rating has gone down due to of your accumulated debts, then getting a low interest loan may be difficult. You can borrow from lenders who provide money to individuals with bad credit but this will be like putting out a fire with gasoline. In the event that you are able to get a low interest loan your next step is to come out with a list of all debts that you would want consolidated. Select those that have high interest because these are the ones that will give money problems later on.
When Your Selected Loans are Finally Consolidated
When you get the loan, immediately pay off the debts that you have selected. Your Final step is to see whether you can still come up with some surplus. This is to add to the monthly amortization that you are paying allowing you to pay off your loan at the soonest possible time.
Some people think that BORROWING MONEY can be a bad thing and will only make your financial situation worse. However, getting a PERSONAL LOAN or any other loan can have its positive effect if your reason is valid enough. For instance, if a loan will improve the quality of your life and you know that repaying the debt won’t be a problem then go ahead do it. When you borrow for the right reason, then you end up having a good debt. The bottom line here is that when filing for a loan, you should have a good reason for doing it.
Knowing a Good Debt from a Bad One
When borrowing money from a MONEY LENDER, you need to be able to differentiate a good debt from a bad one. The general difference is that a good debt will end up helping you out in the future such as improving your life. For instance, if you’re a good building contractor and would like to put up your own construction business, borrowing money to put up capital is a valid reason and this can be considered as a good debt. But if you are going to borrow money just to buy something luxurious for yourself then you will just end up with more money problem.
Other Good Reasons why it’s Okay to Borrow
As earlier stated, putting up a business to further your profession is a good reason to borrow money. Getting a loan to enroll yourself or any of your family in college is another. We all know that education cost a lot, and it is actually normal in today’s times to get a student loan. Using loan money to purchase properties such as a house and lot can be beneficial later on. Borrowed money can also be used to pay off your other debts thereby consolidating all of your financial liabilities into one. Finally, if you can get a loan with a very low interest rate you can use the same to pay off your other debts that incur very high interest.
A PERSONAL LOAN is applied for by an individual for (as the term connotes) personal financial purposes such emergency medical expense or home and car repair expense. One thing nice about personal loan is that you can use it at your discretion unlike a car or home loan where its usage is very specific. There are actually two general feature of the loan that is quite attractive and that is the flexibility of its use and no collateral is needed to secure it.
How much can you get from a Personal Loan?
There is really no exact amount that you can borrow from a personal loan but suffice to say it is enough to cover expenses that would require a sizable amount of funding. However, how much you can borrow is not really the issue but how much you can afford to borrow. Make sure that you have enough surplus (after expenses) to ensure that you will be able to repay the monthly amortization of the loan.
Things that Affects Approval of the Loan
Two general considerations are what concerns lenders before approving a personal loan and these are your credit standing or rating and the consistency of your income. Your chances of landing a loan would be good if your credit score is above average. The higher your score is the better your chances of being approved. Your employment, consistency of your annual income will also be scrutinized. The reason for this is personal loans are not secured, the lenders only source of guarantee that you will be able to handle repayment terms is the consistency and amount of your annual income. To double your chances of getting the right amount of loan that you require, you can convert your application from unsecured to secured loan. Here you would need to put up collateral on the loan. By doing this, you lessen the risk of the lender when they approve your loan. The advantages of unsecured personal loan are it’s easy to apply for, approval is quick and no collateral is required. Its only drawback is the high interests it incurs.
The continuing upgrade in lifestyle is one reason individuals have resorted to BORROWING money. Today filing for PERSONAL LOAN is becoming to be quite common. Personal loan is one of the easiest loans to apply and the friendliest especially for average earning individuals. The following are just things to consider when applying for personal loan.
Value and Importance of your Credit History
When applying for a loan, the most important criteria that the lender would investigate are your credit history and credit rating. For most (if not all), a good credit background along with an above average credit score is a guarantee that the borrower will be able to pay back the loan. It is therefore important that you check your credit rating first before even thinking of filing for loan because a low credit rating will surely limit your chance for a loan.
Borrow Only What You Need
One common mistake that borrowers commit is to borrow more than what they can repay. When you plan to borrow make sure the amount is exact for your purpose. Borrowing in excess would put you deeper in debt and you may not be able to manage paying it back. Check your budget before borrowing and see if the surplus from your income and expense sheet would be enough to cover the repayment of the loan.
Shop Around for the Right MONEY LENDER
Diligence is the key to get the best loan deal in the CREDIT market. The financial market is full of various lenders today that the competition makes lenders offer different sweet deals to attract clients. You don’t need to go out to shop around and instead just surf the internet for various lenders that offers good deal on loans.
Be Ready with your Documents
Make sure that you have all necessary documents needed to prove your capacity to pay back the loan. They should be ready for presentation at a moment’s notice. Never apply for more than one loan at a time because this will be more to your disadvantage. Learn to wait for results first before applying with another lender.
The first thing you see when you are financially stable is freedom from BORROWING money from MONEY LENDER. However there are other benefits that one can derive if he or she is free from the clutches of personal loans and other types of loan. One of the best things that can happen when you find yourself financially stable is not that there is now security in whatever expenses that may come your way but the positive psychological and physiological effect it will have on you.
Healthy Body and Healthy Mind
According to surveys, money is the number one cause of why individuals are stressed out. Thinking of where to get the money to pay-off monthly expenses puts a lot of pressure and stress on the breadwinner of the family. If you are financially stable you eliminate this kind of health problems.
One of the main causes of failed marriages is money argument between husbands and wives. Money problems results to finger pointing between partners and this usually leads to the marriage being broken up. A stable finance situation corrects this kind of a problem and therefore indirectly saves relationship between man and woman.
Future is secured
You have plenty of financial options when your income and expenses is perfectly balance. Unlike those who are saddled with debt, their main priority is where to get the next payment for his or her debts. With a good financial background your financial marginal options are wide and both you and your family will surely benefit from it.
You can be Generous
When you have a lot of surplus, you create a financial buffer that can be use to help not just you and your family but to financially assist other people too. In short having a sound and healthy financial situation can even make you a generous individual.
The Effect on Family Members
Children who grow up experiencing the benefits of being financially stable will also look for ways and means to be also that way when they are on their own. Teaching children the value of being financially stable will not only teach them its importance but will use them as tools for a better and secure tomorrow.