5 Questions To Ask Before You Apply For A Short Term Loan
If you are thinking about applying for a loan, there's absolutely nothing to be ashamed of.
In fact, almost everyone has some form of credit or debt – from auto loans, credit cards, mortgages, and student loans.
So, if you are thinking about applying for a loan, the most important thing is to make an informed decision.
First: Make sure you're applying for a loan for the right reasons.
Second: It's vital you research your options, and that you know what to look for when applying for a loan.
Below are the five basic questions you should ask yourself every time you apply for a short term loan.
1) How Much Do I Really Need To Borrow?
If the purpose of the loan is to purchase an item, for example, is it possible for you to save half and apply for a loan for the balance - thus reducing the amount you need to borrow?
Perhaps though, you need a loan for more time sensitive reasons and therefore saving money in advance isn't an option.
Regardless, always review your budget and make any necessary adjustments.
Once you have an up-to-date budget, you will be able to see how much money you have available to allocate to loan repayments.
2) Do I Make Enough To Repay The Loan And The Interest?
The first thing to be aware of when applying for a loan is that the required minimum monthly amount of your loan is not the total amount.
In addition to the minimum monthly repayment, your loan will also be accruing interest. Depending on the loan, the interest rate will accrue daily, weekly, or monthly.
With your revised budget, make sure you are pulling in enough cash to repay at least the minimum monthly amount, and ideally, the interest accrued during the period.
To explore the total cost of a short term loan, including interest charges and monthly payments, try playing with our online loan calculator.
If, after using the loan calculator and reviewing your budget, it appears you will be struggling to make loan repayments, then we recommend not taking a loan out.
There's plenty of alternative financial plans to dig yourself out of debt. Check out my earlier article on the best way to crush your debt.
3) How Long Do I Have To Repay The Loan?
The loan term, or the time that you have to repay your loan, varies depending on the type of loan you apply for and the amount you wish to secure.
From weeks to months, choosing the amount, term, and the associated interest rates according to your budget is the most important point.
One thing to keep in mind is the ability to repay your loan early. Ferratum, for example, allows its customers to repay their short term loan without any early repayment penalties.
This option allows customers to make repayments based on their own budget, which makes paying their loan more flexible and comfortable.
Make sure whatever lender you choose allows you the ability to repay early without incurring any annoying penalties.
4) How Will I Manage My Other Debts?
If you already have other debts such as a credit card or other loans, taking on more debt is not the best idea, as it will only result in you becoming further in debt.
Before applying for a short term loan, make sure you have budgeted for paying your credit card bill and other loans as well.
Does your budget allow you to manage another repayment?
5) Have I Picked A Trusted Lender?
There are plenty of financial institutions on the market offering short term loan options including the big banks.
In addition to the fees, and terms and conditions, it's important you feel comfortable with the lender you choose.
Make sure all fees are clear, the company is credible and trustworthy. Read online reviews from other users on a website such as Google to see which lenders have a good reputation.
The process of finding the right credit institution will help you feel more confident that your choice is the right one!
At Ferratum, we believe in doing things differently. As an international pioneer in the field of financial technology and mobile lending, we have expanded our operations to 24 countries since 2005.
When you apply for one of Ferratum's online loans, you can be confident you're in good hands.
Our mission is simple: To provide the best, fastest, and most user-friendly lending services available 24/7 with best in class customer care. Apply online in just minutes and receive the money you need within one day.
When it comes to money, with Ferratum, you've got less thing to worry about.
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