Questions to Ask Yourself Before Taking a Personal Loan

Johnson
5 Min Read
Credit: rawpixel.com Via Freepik

Personal loans can be highly valuable for those in need of emergency funds. Whether you encountered an unexpected medical bill, lost your job, or need to fund a home or vehicle repair, a personal loan is an excellent alternative to credit cards or other loans with lengthy application processes.

A personal loan is a fast-growing form of consumer lending in Canada, and flexibility may be one of the top contributors to its popularity. A survey found that approximately 65 percent of Canadians have taken out a personal loan. The survey also revealed the top reasons for taking out a personal loan: buying a car, financing a mortgage, consolidating debt, funding a renovation, and paying off credit cards. Whatever the reason for borrowing, you must ask yourself the following questions before taking a personal loan.

Why Do I Need a Loan?

Outline your needs and determine why you need the money before proceeding with your application. It’s important to identify your needs and goals before getting a loan, as this can help you make critical decisions, such as how much money to borrow and when you may be able to pay it back. In some cases, such as medical emergencies, it is easy to identify your needs and choose an amount. On the other hand, borrowing money to fund a renovation or consolidate debt requires some planning.

How Much Money Do I Need?

After identifying why you need funds, it will be easier to pick a number. Determine how much money you need and avoid taking too much if you don’t need it. Taking too much money beyond your needs will add to the burden of a higher repayment amount and interest rates.

The smallest personal loan amounts are typically $500, but many lenders offer up to $15,000. The amount you need depends on your need for the loan. Do you want to pay off a medical bill? Are you saving money for a renovation? Did your car suddenly break down? Sometimes, you can get a quote from service providers, such as the mechanic for your car or a contractor for home repairs or renovations. This helps you set the right amount of money to borrow.

When Can I Afford to Pay it Back?

The periodic repayment amount of an installment loan includes the principal and the interest. Some platforms will allow you to get an estimate of what your payment structure will look like before you apply for the loan. The payment values can vary among individuals, depending on the interest rate in your current location, the loan amount, and your employment status. Take the time to learn your payments to determine when you can afford to pay the loan back before committing.

How Do I Choose a Lender?

One of the first things to consider when choosing a lender is their reputation. The last thing you want is to borrow money from an unlicensed lender, as this can lead to fraudulent activities, resulting in monetary losses for you.

Consider a credible platform like FlexMoney – Canada’s most innovative digital lender, when looking for a personal loan provider. Their website allows you to get your no-obligation quote in minutes, and you can borrow anywhere between $500 to $15,000 with terms from six to 60 months. The simple application process and lack of paperwork and faxing allow you to get quick access to cash when you need it most. Choosing a professional and trusted service is crucial when you share your personal information online, and FlexMoney uses tools like bank-level encryption, among many others, to protect your information.

Share This Article