Do you know that the total outstanding personal loan debt in the U.S. at the start of 2021 was $143 billion? Yup. It’s also a fact that there are 21.1 million outstanding personal loans in the U.S.
It sounds like there are more than a few people out there who have overspent and could use a few financial tips to help get their budgets back under control.
Maybe you’re one of them — or might be someday. So why not read along as we share some financial planning tips related to personal loans?
1. Find Out What All Getting a Personal Loan Entails
First-time personal loan borrowers (and even some with more experience) can be caught off-guard during the application process. Or, worse, they might wind up with unfortunate surprises after accepting the loan.
So before embarking on a personal loan application, you might need more personal loan information. Start by asking yourself questions such as:
- How long will I have to pay back the loan?
- How much interest will I pay?
- How will my budget accommodate the monthly payments?
- Is my credit score high enough?
If you’re applying for a personal loan, here are several other questions to consider beyond these.
2. Ask Yourself if You Really Need a Loan
Personal loans can be tempting, especially if you’ve paid off your college debt or landed your dream job. But as the old saying goes, “a bird in the hand is worth two in the bush.”
In other words, instead of taking out a loan for something frivolous, you might begin saving your spare change toward an emergency fund. You might need it someday.
3. Be Prepared to Create a Monthly Budget and Stick With It
Those who grew up with allowances had an excellent introduction to money management, especially if their parents explained basic budgeting along the way. Others were not so lucky, though. They might never have learned any budgeting skills.
If you feel getting a loan is essential and you qualify for one, this would be a great time to develop a workable budget — to head off serious debt.
4. Shop Around for the Best Rates and Terms
It may be that your local bank or credit union can extend you some decent rates and terms. But have you checked other lender types — larger banks, online lenders, or even peer lending organizations?
5. Don’t Borrow for Luxuries
Sure, it might seem like a good idea to buy your fiancée a “rock” that costs thousands of dollars. But does she even want it, especially at the cost of getting your marriage off to a solid financial start?
It’s best to find out before committing multiple paychecks to this purchase or others that easily could be substituted by less costly options.
Never Too Many Financial Tips and Tricks
For many people, managing money is challenging. But that’s no reason to sit back while injudicious financial decisions run their course, expecting everything to work out in the end. You can’t take chances like that.
Being informed and making wise decisions about matters such as applying for a personal loan is essential. When you’re an adult, it’s doubtful that anyone will step in to stop you from being foolhardy with your money.
If you need more financial tips, including personal loan information, as so many people do, check our site as often as possible. You will learn more each time!
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