Personal loans should be seen as an emergency resource to be used only as a last resort. This is because this type of credit is usually expensive, especially in financial. While the average interest charged on personal loans made at banks is between 5% and 6% per month, on finance, the rate may be close to 20%.
To have an idea of comparison, taking a loan of $10,000 at an interest of 20% per month, you will pay $1500 more in interest per month than if you had contracted a 5% line.
Before making this decision, which will compromise your budget in the coming months, it is essential to answer some basic questions:
Do you really need that money?
Taking out a personal loan is on the joke. The operation must not be contracted on impulse. Think about your real need for that money.
Is it possible to wait a while and save the amount you need?
If you decide that you really need the money, assess your urgency now. Is it possible to wait a while until you can collect the total or even partial amount so that you can take out a personal loan for a smaller amount?
Can you borrow from someone closer?
Borrowing money from friends and family, for example, the agreed interest rates tend to be much lower (sometimes symbolic) when compared to interest rates in the market.
Will the final installments fit your budget without blowing it?
This is one of the main practical factors to be considered when taking out a personal loan. There is no point in making a commitment that will end up destabilizing your budget and creating a snowball of debt. Take the opportunity to check that the distribution of your expenses is in line with the 50-15-35 rule.
What is the amount of interest charged? Are they the best option you can get on the market?
Another super important factor to be evaluated when seeking a personal loan is the interest charged. Compare here the interest rates charged by the main financial institutions in the country.
Will I borrow from the bank or finance?
You already know that, in general, the interest on personal loans in finance companies is usually higher than in banks. However, they offer some advantages, such as the possibility of lending money to people with a dirty name, something that does not happen in banks. These must be the two main factors to be weighed in your decision.