The idea of borrowing money is usually frowned upon on and most of us would avoid borrowing if possible.
That said, there may be unforeseen situations in life where we require an extra line of credit. You may be hit with a sudden emergency and require additional funds to see you through. You can’t make ends meet when you are broke. You need to maintain your lifestyle and at the same time, you need to invest for the future. All these require you to have money. What happens when you don’t?
It is thus normal to look for financial assistance from other places. If you are a first time borrower and have your doubts about borrowing, here are a few smart tips you need to evaluate before you start borrowing money:
1. Savings
Have you ever thought of investing or even buying something?
Sometimes, you might wish to purchase a home or a car. All this is possible if you work smart.
The first step is to inquire how much you need, then come up with a plan of how to achieve that amount. The best way to get this amount is by saving. Sometimes, savings might take time. If you go to the bank with a certain amount of money and inquire for more, you will stand a better chance of receiving the money.
In addition, your savings will have reduced the loan by a certain percentage. This will mean that you will spend less time paying up the borrowed money. In short, you will have used a smart method to borrow money that you didn’t have in the first place.
2. Penalties
Life is full of surprises. No one plans for bad things to happen. However, that shouldn’t stop you from achieving your goals.
If you are going to borrow money, it is prudent to think of the penalties just in case things go sideways. Some financial institutions issue harsh penalties which may leave you in a bad financial state. Get yourself a place that will work with you even on those rainy days where you might delay the payment.
At Lending Bee, we have pioneered a new and improved way for our clients to get the latest updates on their loan details. Each successful applicant will receive a personalised login account where they will be able to keep track on their loan status. This way, we hope to minimise the risk of you defaulting on payment and it also ensures that you won’t have to incur additional penalty fees such as late payment fees.
3. Terms And Conditions
Borrowing money isn’t that easy because it must be documented. The documentation is there for future reference in the event that you violate expectations.
That is why it is very important that all parties involved come up with terms that are comfortable for them. Therefore, if you intend to borrow money from anyone or anywhere, make sure you go through the terms and conditions available. You won’t wish to find yourself in a compromisable position all because you didn’t go through the terms carefully.
4. Credit History
Before borrowing, it’s always important to ask yourself these questions:
- What is your credit history?
- Have you borrowed money before?
- If so, how have you been repaying it?
Credit history is basically how you have been paying back your borrowed money before. If you need a large sum of money, then you will need to have a remarkably good credit history. This is known as the credit score. You need to make sure your credit score is good because you never know when you will need it. This is a good way of preparing for a rainy day in the future.
If you are currently struggling with poor credit history and have been constantly rejected by banks and other traditional financial institutions, fret not. Lending Bee will not decline your application immediately due to your poor credit score. We might require you to submit additional documents to access your financial situation better and if we see an improvement, we might be able to grant you with the loan.
5. Do You Have An Amount In Mind?
It’s important to be sure of what you want. You can’t go borrowing money without being certain of the actual figure you want.
It is not wrong to borrow money, you just need to have a plan. The plan will obviously include how much you need in total.
Assume you are planning to invest the money, what will you do if you notice you borrowed less money? You don’t have to borrow money twice for one project. You can avoid that by planning in advance.
6. Variety
The tip that will help you when borrowing money is knowing what options you have on the table. Whether you are borrowing from a bank or a licensed licensed money lender, there are several options.
There are several financial institutions and licensed money lenders and at the same time, they offer different types of loans. So, which loan do you think works for you? You can always do your research and know what is expected of you. After that, you will be able to know the type of loan that is pocket friendly to you. A pocket friendly type of loan is that which you are comfortable in repaying.
Lending bee offers a wide variety of loans for different purposes so you can be assured that you’ll be getting a loan that is best suited for your needs.
7. Payment Plan
Do you have a payment plan for the money you intend to borrow? Does the payment plan seem practical? Do you have a back-up plan just in case your plan fails?
These are questions that you need to ask yourself before you start borrowing money. If you want to borrow money, you need to find a source of income.
Your income is what will be used to repay the borrowed money.
That’s why most financial lending institutions insist you provide a payment plan before they can give you a loan.
8. Purpose
What do you intend to use the money you are borrowing for? You will be doing yourself a favour if you come up with a list of what you want the money for.
From the list, you will evaluate whether you want the money for a want or for greed. If you need the money for a need, then you can proceed and borrow it. If it is for want, then it’s wise to reconsider.
Applying for a loan, whether with a traditional financial institution or with a licensed money lender requires huge financial commitment. Before applying for a loan, you should keep in mind these 8 smart tips to borrowing money in order to get a loan that suits you best.
About Ashley Sim
Calling herself a “professional multi-tasker”, Ashley worked as a relationship manager in a bank for five years. She left her job just before the pandemic happened and became a freelance writer for about a year. Now, she’s making the most of her love for writing and knowledge of the banking and financial industry in her role as a content marketing lead. She hopes to help people make better financial decisions through her content and campaigns.
