If you’re thinking about taking out a loan—make sure you double check this list before doing so sis. Sure, extra cash sounds so nice, but what about interest rate, debt, and long payoff periods?
Loans can be taken out for various reasons, but no matter the reason, one thing is for certain—they must be paid back eventually. Before taking out a loan (for whatever reason), it’s important to stop, think, and get a complete perspective before committing to this arrangement.
We at Boss Women Media are giving you the ultimate “check-list” before deciding whether or not you should take out that large lump sum of cash money. Check out the four things to consider before ever taking a loan below.
Your credit score is such an important factor when deciding whether or not to get a loan. Many loan providers look at your credit score to determine how big or small your loan will be. Your credit score determines how good of a borrower you are—basically can they trust you to pay them back and on time! The higher your credit score is, the higher your chances are of receiving the loan in the first place. Hopefully your parents explained to you when you were younger just how important establishing your credit is—if so, then you know how important it is when deciding whether or not you qualify for a loan.
2. It Ain’t Free Sis
Depending on the type of loan you are wanting to get, determines the amount of interest you will have to pay. Obviously the more the loan amount is, as well as the time frame of your borrowing—will determine just how much interest you will have to pay back. Your loan lender will let you know exactly what your loan will cost you (interest and other charges included), because the last thing you want is to have to borrow more money to pay back money you borrowed in the first place!
3. Time is Money
Here’s the catch—paying off your loan over a long period of time will 100% reduce the cost of your monthly payments, however, it will cost you more in the long run due to how long it takes you to repay them. For the most part, it’s cheaper to borrow over a shorter period of time, so you can save yourself not only time, but money as well.
4. If You Can’t Pay—They’ll Take it Away
You read that correctly. Many loans are secured against some collateral policy in which you aren’t able to miss a payment or you run the risk of losing the entire loan. This may also affect your chances of getting future loans if you aren’t able to pay your original one. If you’re in doubt when trying to decide whether or not you should take out a loan, run over this checklist, and if everything checks off—then you’ll know what your decision should be.