Are you thinking about getting a personal loan? Sometimes an individual, couple or a family reaches a point where they need or want something that their regular budget does not have room to pay the full amount. But how do you decide if now is the right time to obtain a personal loan? Let’s discuss personal loans and several practical ways you can discern when is exactly the ideal time to sign on the dotted line.
Start by focusing on what you need the loan for. Do you realize that you just “need more money” or is it funds to reach a specific goal. We’ll admit that when a borrower has a specific goal in mind, they are often much more successful at obtaining their loan and also feeling confident they can pay it back. You may look at your home right now and think you would like to do some renovations. But when you’ve done some research, talked to home repair experts and determined which projects you want to work on over the next six months then you’ve got a plan that’s much easier to work with. Remember that once you’ve taken care of that personal loan, you can always return to the lender for another one for other repairs you’d like to make.
Whenever you apply for a personal loan, it’s critical that your credit score be as good as it possibly can be. Here are the ratings to aim for:
Excellent credit: 760+
Good credit: 700+
Fair credit: 640+
So what should you do, to prepare for loan application? Start by ordering a free copy of your credit scores. You can get them from the 3 credit agencies, Equifax, Experian and TransUnion once a year without it affecting your credit. Do keep in mind that if you repeatedly check your score, that it may have a negative effect on your credit.
The very first thing you should do is double check the contact information on the report. Confirm they have the proper spelling of your name, date of birth, social security number and mailing addresses that you have had most recently. Once you are confident this information is correct, read through the credit reports, with a yellow highlighter in your hand. If you see anything on your credit report you have a question about or need to improve, circle it with the highlighter. Perhaps you realize there is a bill that you did not pay in full several years ago, that now appears on your credit report. If you see bills you recognize which are unpaid, contact the creditors and make arrangements to pay them. Do remember it can take several months for a positive mark to appear on your credit report for that creditor. If you see anything from a creditor that you do not recognize which you believe is an error, contact the credit bureau immediately.
Take a look at your budget before signing up for a personal loan. Yes, a personal loan can help you get what you need and many are quick to sign up. But it’s important to realize that you are signing a legal agreement to pay the money back. When you’re about to get a personal loan, it’s time to take a hard look at your budget. Perhaps you realize that your family of 3 is about to welcome a new baby. Your current apartment is too small and you’d like to find a new place. That you dream of getting a big house with a yard where the kids can play. So you’re ready to look at a mortgage. Now you want to look at your budget, to see if you can make monthly mortgage payments with confidence. This is an important step, and will actually help you in the long run. You may realize that because you’ve decided to stay at home with the baby for the 1st year, that you have more expenses than realized and a mortgage will need to wait until the baby is about a year old. But you’ve made the wise decision by crunching the numbers, as now you can prepare for your dream home and plan for this goal with confidence.
Comparison shop for your best monthly payments and interest rates. This is something that a savvy borrower does and that we highly recommend to you. Some feel so frantic about wanting to borrow money, that they race to sign on the dotted line. But had they looked at a few more companies, they might have found an interest rate that was 3% lower. Why not put money right back in your pockets? For one thing, that savings can certainly help you pay the loan back quite a bit quicker.
Many individuals and families agree that taking out a personal loan is one of the best things they’ve done long term to build equity for their family. When you think out this decision and plan wisely for the future, it can help you a great deal. Personal loans offer you a great advantage when you otherwise might not have the funds immediately available to afford to purchase something outright.
What’s equally valuable is assessing if now is the right time for you and your family to take on a personal loan. Sometimes the timing is just perfect. Sometimes, just waiting 3 months can be what you need to be ready to sign on that dotted line!