3 Best Ways to Avoid Making Your Personal Loan a DisasterInk Well Mag October 27, 2016 0 COMMENTS
Acquiring a debt, for whatever reason, is never without a risk. You should always put some serious thought on it, or else you might find yourself in a dire financial situation because of mismanagement. It doesn’t matter if you loan a small amount; it could balloon with unpaid fees and accrued interest.
Most Americans have no plans of defaulting on a loan, but they miss payments due to imprudence. To help exercise your due diligence in obtaining a debt, remember the following:
Ask Your Interest in Dollars
Interest is generally expressed in percentage, which is ambiguous to the layman. To avoid bill shock, always ask specifically how much would be your interest in dollars — a language everybody understands. This way, you’d know exactly the amount added to the money you borrow.
Know Other Applicable Fees
Loans For Less noted that most personal loans in Salt Lake City, Los Angeles, and other cities have fixed rates, but you might liable to other charges under certain situations. Ask your lender what would happen if you fail to pay on time. Some apply extra fees, while others would let you roll over the loan and charge the same amount of interest.
But then again, every financial institution has its own policy so never assume. Read the agreement word for word, and don’t be afraid to ask about any detail you don’t understand.
Borrow Only What You Can Pay Promptly
Many lenders perform a thorough process to ensure you have the capacity to repay. However, don’t rely on them alone. You, of all people, should know your own capability to pay back with your next paycheck.
Borrowing beyond your capacity universally spells trouble. A personal loan may involve no collateral, but it doesn’t necessarily mean you can get away with defaulting. Unsettled debts would hurt your credit rating, make you a target of aggressive third party collectors, and involve yourself in litigation.
Loans can help you get by financial struggles, but put you in a deeper hole if you’re unwise. Be a responsible borrower and calculate the risk before acquiring a debt.