Okay, your car needs to be repaired and you currently don’t have the cash you can use right now. But after reviewing your finances, you can identify that a personal loan would be able to help you with this repair. But then again, you remember that you have other things that you need to spend on. Your kid needs a new set of soccer shoes, your wife wants the kitchen renovated and you found this new gaming console that just got released last week. Then you consider including them in your loan.
But is it really needed? Here are a few tips on how you can identify how much you really need when taking on a personal loan.
Identify Your Need
Once you have decided that you need to avail of a personal loan in Singapore, make sure that you have a need or goal in mind. This need or goal will help you plan and manage your personal loan properly. A personal loan shouldn’t be about spending money. It’s not about getting cash and buying the things you would buy when going shopping. A personal loan is an obligation that needs to be fulfilled to a lender with corresponding charges. Having a need or goal is the first step of making sure that your obligation will be screened from risks.
Minimize Your Loan
Make sure that you always have your loans at the minimum. Remember that loans are money that is borrowed from the lender. As payment for the borrowed money, you will need to pay an interest amount that would cover for the fees. These interest payments and other charges are usually computed as a percentage of the principal loan amount or outstanding balance. This means that the higher amount you borrow from the lender, the higher your interest payments will be. As long as you are able to keep your loan at a minimum, your interest payments will be manageable enough.
Check Your Amortization
Review how much you need to pay for every month. Knowing how much your monthly amortization and factoring it in with your living expenses is necessary. You should be able to identify that your income is sufficient versus your total monthly expenses.
There are times when we find ourselves in place where the bills that need to be paid seems to be more than the amount of money that is coming in. Everyone gets to experience this. When we do, we try to be as creative as we can on how to earn that extra cash just to make sure all the bills that are due will be paid. The last option we have on our plate is to get a payday loan just to make sure that all the bills are covered.
Payday loans are money being borrowed from licensed money lenders and are paid with an interest amount due. This interest amount due is the payment that a borrower needs to pay the lender for using the money. Payment is often due within the next 20 days or next payday whichever comes first. It is one of the easiest loan that can availed of by a borrower as it does not require the lender to check the borrower’s credit score.
Be aware though that these types of loan have one of the highest interest rates that go with it. Getting a payday loan would mean paying up to 400% annual percentage rate (APR) of interest. So be careful when getting a payday loan. You have to make sure that you are aware of the amount you need to pay when the loan falls due.
Payday loans are usually granted in small amounts. But being short on your source of funds, this will be an additional obligation you will have to pay for next month and will become something to factor regarding your expenses. When you are considering a payday loan, you need to make sure that you minimize the expense you are adding to your next month’s financial obligations. Only take a loan for the amount that you need and nothing more. Some people often make the mistake of taking on an extra loan to have extra cash. The problem will be felt once the loan comes due next month and the interest fees are applied.
To ensure that your obligations remain at a minimum, always keep in mind that the loan should only be for the shortage you have to pay your monthly bills.
We may have been in a place where you were standing in line to pay for the merchandise you are about to purchase. When it’s your turn with the cashier, you pull out your pocket and find that your wallet doesn’t have cash in it and you pull your credit card out instead. Charging your purchased goods to your card and silently promising yourself that you will be paying for the charges you made in cash in full. Then when the payment due date arrives, you seem to understand that you currently need extra cash this coming week for an out of town with friends, you pay your credit card with the minimum amount due.
The cycle repeats until you realize that you are now deep in debt with your credit card charges.
One way of avoiding this is by getting a card and capping it with a credit limit that you can pay if things are going tough. Here are a few things you can consider to know how much credit limit you need.
Try Using a Percentage
When trying to identify the credit limit you will need, try to base it as a percentage of your salary. In this case, you will be able to have a credit limit that is below the salary you are earning and having the knowledge that your credit limit can be paid. Identifying a specific percentage for your credit limit based on your salary means you know there will be an amount enough to pay of your entire debt in case you max out your credit card.
You can also try a percentage of your expense. But this is much riskier than basing your credit limit with your income. Knowing how much additional expense you can cover until your income isn’t enough is very important when applying this.
Know Your Needs
Another thing you should be aware of would be to know what your credit card is for. Are you going to use it for shopping? If yes, how often do you shop? This will give you an idea of how much you spend and how much you will be charging your card. Knowing what the card is for will allow you to know how much you will spend.
You’ve decided that it’s about time to increase your inventory production as you’ve been selling everything that’s being distributed in your stores. Or it’s possible that you’ve been doing studies that a new store should be set up in provincial locations as more and more demands for your product are being consumed in those areas.
You’ve made the necessary studies yourself and the plans on addressing your concerns seems to be beyond the current cash you have. In this case, you’ve decided to take on a business loan to help you fund the increase in inventory or expanding to other locations. But the main concern is how much should you really loan for.
One of the steps you will need to take is to study your business plan. Identify the expansion you need and most probably (and hopefully) these expansion and growth was captured in your initial business plan. If not, then you will need to make a plan that regards about the business expansion.
When there is a need to create a new plan, the advantage would be an accurate set of numbers based on your current operation. This will help you identify how much your expenditure would be for the action you need to take for expanding your business. Knowing what you will need to spend for is very critical in the business plan as your purchases should provide a return for capital.
Once you’ve identified the goal or need, you should be able to estimate the amount you will need to spend. Always remember that as a rule of thumb when getting a fast cash loan, avail of the minimum loan based on what your goal or need is. Having a minimal amount would allow you to have small interest yield which would not be too far away from the principal. If your loan is big, the interest payment that you need to pay would be also high.
Mortgages are loans that help make property purchases affordable. Once you have decided that you would like to purchase a property, the next step would be getting to find the right lender for you. Getting the right lender is important as they will be the ones to provide you the packages that can help you in purchasing your home. Here are some of the tips you may need when you are looking for a good mortgage lender.
Ask for Referrals
There is a big possibility that one of your friends has already taken on a mortgage to buy their house. Asking them how their experience is with their lender will give you an advantage and actually help you lessen your work in looking for a lender. When you ask for referrals, your friends already share with you essential feedback and background of the lender that will be critical for your decision. Understanding and listening to what you friend can say will help you in choosing your lender.
Carry a Checklist
An important action that you need to take is to ensure that you carry with you a checklist of things you need to do. This will make sure that you don’t forget certain steps in processing mortgage loans. With all the documentation and requirements, having a mental note of things to do will most probably end up forgetting some requirement or step in the future.
Create a Compare Sheet
Of course, one of the most essential things to find a good lender is to have several ones lined up. And the best way to decide which lender will fit you is by having to compare them and their package that they offer. A compare sheet should help you buy ensuring that you see the important items in your mortgage loan such as interest rates, finance charges and even penalty charges. Knowing the different terms of payment will also be beneficial. Comparing lenders will help you remove those who provide less quality loans and leave those who offer competitive loans.