How to Borrow Money Wisely
Borrowing money isn’t always the easiest decision. Many lenders offer large lump sums available for withdrawal which are quickly followed by large interest rates and fees if you prematurely pay off your loan. According to Statistics Canada, the household debt ratio to disposable income across the nation has risen to 170.7% as of the third quarter of 2020. Increasing costs of living have made this trend inevitable with the pandemic dealing a huge blow to Canadians in both their livelihoods and job security.
However, taking out a loan isn’t something to fear. If done right, it can lead you back onto the path towards financial security. The problem with many seeking to take out a loan is the lack of assessing their current financial situation, where their money is going, ways in which they can impact their credit score to secure more favourable conditions and the types of loans they are taking out.
Improving Your Credit Rating
When investors make a decision as to who or who not to lend to, they assess the level of risk the investment poses (i.e. how likely am I to receive my money back?). One of this credit risk’s largest determining factors apart from experience, collateral, and the purpose for which the funds will be used is an individual’s credit rating.
A good credit rating can make or break an agreement. Many firms even have minimum credit ratings to get approved for loans. Generally, a score of 660 or above is considered good and constitutes a lower risk on the part of the lender. A score of 750 or above is excellent while a score of less than 600 is generally deemed high risk for investors.
Ultimately, a poor credit rating is determined by missed payments, using the majority of your line of credit and the amount of unpaid loans. Credit utilization is a term referring to the portion of the credit limit that you take out from a line of credit/home equity loan. Analysts suggest using as little of your line of credit as possible and taking out the majority of your credit can make lenders nervous. Unpaid loans and missing payments also turn investors away. Try to take out small loans for separate uses and pay off each one before considering borrowing more. Unfortunately, at times, paying them off becomes infeasible.
Debt Consolidation - Borrowing More to Pay Less
Borrowing money won’t necessarily push your account further into the negatives if done well. Different kinds of loans have different interest rates. For instance, a line of credit whose interest rate is based on the national prime lending rate for big banks stands at 2.45% as of 2021. On the other hand, payday loans, quick, short-term unsecured loans which allow you to borrow up to $1500, payable for up to 62 days have interest rates that can soar as high as 500% APR! Ultimately, the main area of concern is the interest of payments.
Let’s take one of the most common forms of debt: mortgage debt. The longer it takes for an individual to pay off their mortgage, the more interest they accrue on their mortgage. Especially in times of financial hardship when people are forced to skip mortgage payments, interest piles up until eventually, an individual might be paying more to cover interest expenses rather than the actual mortgage itself.
Personal loans offer a comprehensive avenue for debt consolidation. A study by TransUnion on the effects of debt consolidation found that in the long run, individuals who consolidated their debt through personal loans pay off just over 58% of credit card debt and more than 68% of consumers seeing their credit scores improve by more than 20 points post-consolidation.
At MagicalCredit, we offer an avenue back to financial stability through our fair and comprehensive lending system. Our loans are paid over the course of a 6-60 month term with interest rates starting at 3.4% per month. We understand the dire situations you may find yourself in and a not-so-perfect credit score because of some past financial mistake or hardship won’t disqualify you from obtaining a loan where big banks may turn you away.
Ultimately, debt consolidation not only improves your prospects in the short-term but long as well. An individual with a history of effcetvily paying off loans is far more likely to be accpedted for credit in the future. MagicalCredit wants to make this possible with our shorter loans ensuring less interest rate fluctuation to give you greater peace of mind.
Different Pathways, Same Result
Our lives are complex and financial burdens can come from all sides. That is why at MagicalCredit we understand that our terms need to be flexible to meet your financial obligations. Whether you are struggling to pay the bills after your hours at work have been cut, need money for legal purposes or for a medical emergency, MagicalCredit has a unique plan catered to your needs.
MagicalCredit offers bi-weekly, monthly, and semi-monthly installments for all personal loans ranging in sums from $500 to $20,000; this financial aid is also included for those eraning income from Child Tax Benefits. This is because we understand the financial toll that your family may be under and are willing the alternative mode of income to help you in the longrun get back to stale financial footing.
Unlike with many payday loans, our services will offer you lower and fixed rates of interest on your loan as well as a fixed payment period so that you can know what to expect and don’t have any surprises thrown at you down the road. Similarly, with our commitment to customer service, we allow you to pay back your loans before the maturity date at any time with no additional fees attached.
Convenient and Easy-to-Access
Our team at Magical Credit is made up of an experienced group with top financial service representatives and debt resolution specialists who will make it there mission to get you the loan you desserve and a payment plan that won’t leave you struggling every month for extra funds. Our goal is to ensure easy access to credit through convenience for bad credit loans. Our mantra: “Everyone deserves the opportunity to get a loan when they need it.” Holds true through thick and thin.
At MagicalCredit, we ensure the smoothest experience for our clients by taking the burden off your back. When it comes to applying for a personal loan, our homepage at www.magicalcredit.ca offers a comprehensive explanation as to the options available to borrowers, a calculator which tells you exactly the amount of money you will pay in your fixed installments based on the amount borrowed and payment period as well as a 5-minute application form which you can expect a reply within 24 hours.
Tips to Borrowing Wisely - A Summary
- Assess how many loans you’ve taken out and determine their necessity.
- If taking out lines of credit, try to use the smallest portion possible of your limit.
- Using debt consolidation through lower interest loans to prevent high interest debt from getting out of hand.
- MagicalCredit offers flexible terms on personal loans for all purposes, visit www.magicalcredit.ca today to learn more!