The DO’s and DON’Ts of Personal Loans

Thinking about getting a personal loan? Here are our top tips on what to do and what not to do when considering a personal loan.

DO

• Decide exactly how much you need to borrow – Borrowing too much leads to unnecessary debt. Add up all the costs involved in what you are purchasing and stick to borrowing exactly that amount.
• Work out exactly how much you’re able to pay – You don’t want to be struggling to pay of your personal loan. Budget your monthly spending to calculate exactly how much you can afford to be repaying each month prior to taking out the loan.
• Know exactly what you are purchasing – Getting a loan just because you can, isn’t a very good reason to do so. Once you have a specific purchase in mind, then look into getting the personal loan.
• Compare loans! – With so very many options available, don’t just settle for the first offer. See what’s out there and shop around for the best offer.
• Plan for the future – What you borrow will be paid back, with interest! You will be locked into a contract for a long period of time until that debt is paid off. You need to make sure your long-term plans can handle the repayments and terms of your loan.

DON’T

• Say ‘yes’ to more – It is always difficult to turn down money, but over borrowing could put you in serious financial with larger repayments and longer contract terms, it is important to only borrow what you need, and don’t be tempted to take more.
• Absently say ‘yes’ to protection insurance – You need to seriously consider what this is and what it means. Most personal loans come with optional payment protection when you apply, which might mean paying quite a bit extra each month (sometimes as much as 20% extra!). Consider your circumstances carefully before signing up for PPI and make sure you are getting the best deal possible if you decide to go ahead with it.
• Ignore the fine print – Just because it’s small, doesn’t mean it’s not important! Read everything over carefully before signing.
• Neglect your repayments – Yes, this seems like an obvious don’t, but it’s a very common problem for most people who have borrowed. Consider setting up systems like direct debit, so that simple issues like forgetfulness won’t affect your repayments. If you miss payments on your loan, your interest rate charges will add up and get you even deeper in debt.

iCREDIT’s simple loan application can help you find a, compare and choose a suitable personal loan with confidence to meet your lifestyle and budget requirements. Our personal finance consultants can assist you with finding a competitive finance package through Australia’s leading banks and financiers tailored to meet your needs.