How can borrowers and those taking out a second mortgage get the best deal in today’s market? How can consumers know what the best type of personal loan for their scenario might be? Truthfully, it’s hard to tell at times as everyone and their mother is slashing rates in hopes of attracting customers. A borrower’s individual circumstances need to be balanced against interest rate and a loan’s repayment schedule. Everyone is different, and everyone’s circumstances are different.
So much for austerity in today’s market. Mortgages rates are at an ultra low, and what once was a forbidden, ten year mortgage rates with very low interest rates are becoming a hot commodity. Personal loans are fairly cheap as well, and even the big banks are willing to drop their pants by offering unheard of interest rates in hopes of gaining your business. Credit card providers are falling over themselves to offer 0% terms. Indeed, cheaper interest rates are enticing consumers to borrow an extra even when they might need the money. It’s very easy to find a personal loan to suit you through one lender, rather than comparing multiple lenders, and that’s mostly because everyone lender’s purse is wide open and ready for taking by the consumers.
Keeping in mind that what banks give with one hand, they take with the other: the low interest rate environment continues to punish savers. So, without falling victim to your own mind games, here are two questions that you should always ask yourself before you get into the market for a personal loan.
1. Do You Really Need That Loan?
Whether you’re looking for a loan for your next car, home or simply a personal loan because you need the cash, you should always ask yourself: Do I really need the money that badly? Sometimes when you sit back and workout the numbers, you may realize that you can forgo that personal loan and save yourself the additional money you’d spend on the interest.
2. Can I Afford to Pay the Loan Back?
The number of Canadians missing or defaulting on loan payments fell to pre-recession levels during this year even though the amount of money owed continued to rise. Despite the great news, non-mortgage debt loads continued to increase. One question that many consumers fail to ask themselves: Can I afford to pay this loan back? Sadly most get caught up in the euphoria of the purchase, such as their new car, home or the fact that they’ll be able to breathe a little easier because they’re about to consolidate all of their debt into one payment. It’s easy to stretch the payment terms, but at the cost of paying more in interest. So, is that new car worth it in the end? Definitely it’s something to consider, and that’s why you should always consider your affordability anytime you borrow money.
So, What’s the One Route to a Great Personal Loan?
Budgeting ahead is the one route every needs to go through before jumping into any type of a personal loan. It’s that simple, yet very few borrowers actually do this step. Everyone seems to be more concerned with the make and color of the newly proposed car purchase than how they might afford the new purchase. Instead you should try and create a realistic budget, and fit your newly proposed personal loan within your budget. Look for how much you’ll have leftover and whether you’ll be able to still have a life.
Borrowing money is not complex or daunting as it’s made out by some. Rather it’s a fairly simple process that involves some planning ahead, a little bit of negotiating and not being afraid to walk away if the terms don’t fit your lifestyle.
Cheers and thanks for stopping by!