The decision to take a loan is a significant one. It is not a decision to be taken on impulse. Otherwise, soon after taking the loan, you will realize that you won’t repay the loan.
In that case, taking a loan is a blunder. We will share a handful of questions below. Ask yourself these questions before deciding to take a loan.
Once you ask yourself these 4 questions, it will undoubtedly become easier for you to understand whether you should take the loan or not.
1. Is it easy for you to repay?
You have to take into account the monthly payment. If you need to stretch yourself to pay the monthly installment, you shouldn’t take the loan.
Only when you can repay the loan, even if the monthly repayment is 50% higher, should you go ahead and take the loan. That is because, in the future, interest rates can increase. In that case, the monthly payment will increase.
If your finances are such that you can pay a higher monthly payment, you can go ahead and take that loan.
2. Do you have a stable income?
Even if you take a personal loan, it can last anywhere from 2 years to 5 years. Other types of loans can last even longer.
That is why, before taking the loan, you need to ask yourself do you have a stable income?
Only when you have a stable income can you pay on a timely basis throughout the loan tenure. Otherwise, paying off the loan will become difficult.
Only when the answer to this question is yes, can you think about going ahead and opting for the loan.
3. Are you getting the loan at reasonable interest rates?
Taking a loan at a high interest rate leads to higher repayments. In that case, you might not be able to pay it off on time. When you skip a payment, you will have to pay compound interest and also penalties. In the end, you end up paying much more than the agreed amount.
The way to avoid this problem is to find out whether you’re getting the loan at reasonable interest rates or not. If you have no idea regarding the interest rates, you can take quotations from multiple lenders. After taking quotations from multiple lenders, it is easy to know about the prevailing rates. Accordingly, you can decide whether you’re getting the loan at reasonable interest rates are not.
A simple search for something like a money lender in Jurong West will provide you with a list of all the money lenders near you. After that, you can easily contact them and inquire about the interest rates.
Only when you get the loan at reasonable interest rates can you go ahead and opt for it.
4. Is it possible to foreclose the loan?
In most cases, if you have a stable income, you will end up foreclosing the loan. For the same, you will have to make a prepayment.
Many money lenders make it notoriously difficult to foreclose the loan. They charge you an excessive amount as a penalty for the same.
Before you opt for the loan, it is essential to ask yourself will you be able to foreclose the loan?
You have to look at the terms and conditions of the lender to foreclose the loan.
Only when the answer to this question is a yes, can you opt for the loan. So, before you take a loan and over-commit yourself financially, it is a good idea to ask yourself these 4 questions. Consequently, you can decide whether you should take the loan or not.