3 Questions to Ask Yourself before Getting a Personal Loan
It’s that time of the month again where you’re forced to look at your finances and see where you’re at in terms of your goals (or problems).
Once you’ve reduced your expenses, credit card payments, utility bills, and installments, you’ve come to realize that you’re in a rather challenging spot because you’re left with far less than expected. Seeing that the numbers for your post-expense finances are too low to keep up with your needs, however, it’s clear that you’ll need to find a solution that will help you out.
Well, this is where a personal loan can come in handy—but should you get one?
Questions to Ask Yourself
As one of the most commonly available forms of financial assistance today, personal loans are crucial for many Memphis borrowers looking for financial support in challenging situations. However, the one thing that most of those in need of assistance from this type of solution need to know is that it’s not always applicable for every single situation that requires a loan.
To best establish whether you’re going to need a personal loan or not—and whether it’s best suited to your needs—here are some questions that you should ask yourself:
Question #1: “Is there anything I should configure with my budget first?”
Before you even think about getting a personal loan (or any loan, in particular), you must run a thorough assessment of your current budget and see if you can rake in more money by tweaking your expenses.
When assessing your finances, the very first thing you’ll need to look at is your debt-to-income (DTI) ratio—this particular figure denotes how much of what you earn goes into paying debt each month. It’s required that you’re aware of this number first because lenders will ask you for it; but, it’s also ideal to go over your numbers first to see if you can cut unwanted costs.
Question #2: “What does my current credit look like?”
In personal loans, the presence of credit scores and their influence is relatively simple: the higher your rating is, the more you get to borrow. However, it’s also vital to know what your credit’s looking like because it can also affect your interest rates, with lower figures being matched to higher scores.
Generally, applying for a personal loan with a mediocre credit score isn’t wise because it translates to interest rates, monthly payments, and total interest being multiplied just with a difference of 100.
For a 760 credit score, for instance, borrowing $25,000 yields a 2.5 percent interest rate and $444 monthly payment—the same amount at a 660 score yields a 12 percent interest rate and $556 monthly payment.
Question #3: “Will it be the most practical thing to do in the long run?”
Although personal loans give money relatively fast and ensure that you have the most convenient experience with seeking financial assistance, they can help out in the long run when used wisely.
When it comes to determining whether it’s best to take a personal loan out or not, the golden rule is by understanding your reasons for doing so—which is where the importance of financial returns comes in.
If you’re seeking help for something meaningful and potentially profitable like business funds or home renovations, then it’s ideal that you contact Central Loan & Finance Memphis for assistance!
No matter how inviting the thought of getting a personal loan may seem or how easy it can be to apply for, it’s always vital to understand that it’s not the best idea all the time. By asking yourself the three critical questions mentioned above, you can best determine whether the move to apply for such a program is best suited for your needs or not!
If you're looking for a personal loan in Memphis, TN, then look no further because Central Loan & Finance is here to help. We make sure that you have access to fair and straightforward loans, especially in time of need. Get in touch with us today to see how we can help!