Are you the type of person who resort to borrowing in times of need? Lenders can be helpful especially when the need is urgent. On the other hand, you have to be careful because you don’t want to swim in a pool of debt, don’t you?
In case you are struggling to make ends meet despite earning in dollars, here are some questions you need to ask yourself first before you apply for another loan:
1) Where do you plan to use the borrowed funds?
This is the first thing you need to ask yourself before you borrow money. Surely, everyone has needs with different degrees of urgency. Will it be used to pay for your child’s tuition fee? Medical expenses? Monthly amortization that you forgot to pay last month? Home renovation?
Once you identified the purpose of your loan, ask yourself the next question below.
2) Is getting a loan really necessary?
Some loans are necessary and acceptable. For instance, it is understandable that you can’t immediately shell out millions to buy a house and lot, so you borrow money first. On the other hand, there are expenses that CAN wait and something you can save up for.
It is important to establish the degree of urgency for that particular expense that requires you to borrow money. If you simply plan to use it for vacation, then don’t you think it’s much better to just save for it first? If the loan is for payment of utilities, then don’t you think it’s better to evaluate your budget and see which expenses can take a backseat first? A loan is still a loan, regardless of where you plan to use the money.
3) What type of loan should I get?
Assuming the need is urgent and necessary, the next thing you need to ask yourself is what type of loan should you apply for to accommodate that need.
There are many loan facilities offered in the market that comes with different rates and benefits. Decide if you will go for secured (requires asset) or unsecured loan (often has higher interest). Go for the loan that is designed to address your specific need to make the most out of your loan.
4) How much should I borrow?
You want to maximize your loan application, but do you really need a big amount for that expense?
Borrow only the amount you need and stick to it. This way, you will minimize the risk of drowning in debt. Take advantage of online loan calculator too, to give you an idea on how much you will pay every month.
5) Can I pay for it?
This is another important question you need to ask before applying for another loan.
OFW life is not easy. Somehow, you are responsible for all the expenses of your family and at times, even your extended family. Before you apply, check your budget and see if you can accommodate another loan on your list of expenses. Use the amount in the loan calculator as a guide (and add a few hundreds to give you a ceiling) and see if you still have something left for savings every month.
6) Does the loan have flexible payment options?
What is the mode of payment? Does the loan have online facility to make it easier for you to pay the loan? What about partner banks in the country where you are working?
You can’t physically deposit the payment every month, so make sure that your preferred lender has online facility to accommodate payment. Issuing post-dated checks can be another option, but surely, many OFWs prefer paying online for convenience.
7) Where should I borrow?
Loan sharks are everywhere, taking advantage of people’s constant need for money. Beware.
When applying for a loan, make it a habit to research and find out about the different lenders that offer loan facilities based on your needs. Check interest rates and read reviews about them to help you trim your list. Choosing a lender is crucial because they will be your financial partner in times of need. Choose well.
Getting a loan can be helpful and beneficial, as long as you know how to use it properly. Take some time to ponder on these questions before clicking the “Apply” button to avoid compromising your financial status in the future.