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. Be sure to calculate your loan payment. 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.