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Should I Get a Loan? Knowing When to Apply For a Loan

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This is a question that puzzles many people because there are so many stipulations that need to be met and considered before you apply for a loan. Don’t get discouraged when you encounter the paperwork required to apply for a loan. It might be simpler than you think!

applying for a loan

Ask yourself each of the questions listed below to guide you in your decision making process when you’re wondering whether or not you should get a loan.

7 Things to Consider Before Applying for a Loan

1) Do You Really Need a Loan?
Before applying for a loan, think about whether or not it is something you really need. Have you exhausted every other possibility for borrowing money: for instance, family or friends? You don’t want to get into a loan agreement if you don’t have to. Make sure applying for a loan is your last resort, not an easy way out of financial troubles.

2) Do You Need to Make this Purchase Now?
What are you using your loan for? Are you purchasing something that you absolutely need right now? If the purchase isn’t urgent and can be postponed, then perhaps a loan isn’t the best option for you. If you just want the money to buy something you can save up to buy, then waiting is a better option. Only take a loan for something that is really necessary, and you need it urgently.

3) Is There a Less Expensive Option?
If the purchase is something that is necessary and needs to happen as soon as possible, is there a more affordable option? For example, if you need a car, do you have to buy it brand new, or can you buy a used car for a fraction of the price? If money is tight, you don’t have the option of being picky with what your purchase. Use the money you have and stretch it as far as it will go before applying for a loan.

4) Can You Afford to Make Payments?
Every loan requires you to pay back the loan company. Have you chosen a loan amount that you can afford to make payments on? Discuss options with your loan company. If you can’t afford to pay your loan fees every two weeks until your loan is paid off, then don’t agree to it just to receive the loan. You’ll find yourself in more financial trouble if you can’t afford to make payments.

5) How Fast Can You Pay it Off?
Based on your payments and your income, how fast can you pay off your loan? The faster you can pay it off, the better off you will be. Interest rates will only add to your payments and the length of time it takes to pay off the loan. Make sure you agree to a loan amount that you feel comfortable paying off.

6) Do You Have a Steady Monthly Income?
Every loan requires you to pay the money back. You must have a steady monthly income in order to do this. Whether it is a job or a government subsidiary cheque, you should have a source of income. If you don’t have a steady monthly income, don’t take out a loan. You will only create more debts for yourself.

7) What Happens if You Can’t Pay Off Your Loan?
If you are unable to pay off the loan, because you lose your job or your financial situation changes, what happens next? Do you have other sources of income, family or friends that will be able to help you pay off the loan? Your job is not always guaranteed, so you can’t assume you will always have money to pay the loan. If you have no other way of paying off the loan, you should reconsider whether or not a loan is the right choice for you.

Remember, taking out a loan is not always the best option; every situation is different and not every situation requires you to take out additional credit. If you decide a loan is the best solution for you, make sure to carefully consider where to apply for a loan. Applying to multiple places at once can hurt your credit score because each application will likely require a credit check, which will decrease your credit score.

If you need a cash loan now, fill out a Magical Credit loan application now! We are a Toronto-based loan company that specializes in providing bad credit loans to people on government income, subsidies and pensions. Call us at 1-877-213-2088 for assistance now.