Personal loans are not difficult to acquire these days, for almost anyone with a pulse. On its surface, that is a good thing as funds are available to help people in times of need, but the real question is: what do you mean by “need”? No matter what the reason, it is important to understand that there are good reasons, and not so good reasons. Let’s examine some of the do’s and don’ts of personal loans:
#1: Do have a clear and up to date understanding of what is in your credit report. Without this, you are operating from a severely limited position regarding your ability to shop effectively and to bargain.
#2: Do take the time that is involved to research and shop for loans and the various interest rates that may be offered to you, whether that be traditional banks/credit unions, a small lending company, or one of the many excellent options for online personal loans.
#3: Do consider this type of loan for the right reasons, such as education, home improvements, emergency medical care, help with avoiding a calamity (losing your house) etc. The benefits from these sorts of reasons are obvious as they pay you back in some way; better job and more money from having a degree, your home being worth more, and so on.
But What About Some Not So Good Reasons?
#1: Don’t get the loan for what might be viewed as non-essential reasons, like items that you just want but don’t necessarily need (the biggest, baddest new television on the market and other “toys”) a trip that you can’t really afford, and other reasons that would seriously call into question whether you aren’t trying to live “beyond your means”.
#2: Don’t trade one debt for another unless it’s absolutely necessary, i.e. to pay a bill that saves you a greater amount of money in the long run, or some valuable piece of property that you might otherwise lose.
#3: Don’t get in over your head. This ties back into living beyond your means, and so you must really ask yourself “How am I going to pay for this?” If it’s not an essential need and you can’t really afford it, then you are just making things worse by piling up more debt and potentially trapping yourself for years to come.
How to get a personal loan is up to you. A few last things to consider that could help you decide whether to proceed would be: Am I expecting a raise? Am I close to paying off a car or other item that will free up cash in the near future? As you can see, there are many things to consider.