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Loans can be a convenient way to grow your business, to cover unexpected expenses, and protect assets and liabilities during lean times. However, it goes without saying that when you take out a loan you are obligated to meet certain repayment conditions that could negatively impact your home finances and business if you aren’t mindful in creating a repayment strategy for all borrowed sums.
While borrowing money is never ideal there are times when it will become necessary. So for tips to help you be a more responsible borrower this season, here are five tips to get you started:
Consider consolidating debt at a lower interest rate
Debt consolidation is one of the most popular reasons to get a personal loan. As consumers typically use personal loans to consolidate credit card debt, but you can also get a personal loan to pay off other, higher-interest loans that you may currently have. As when you shop for personal loans for debt consolidation purposes, generally for the total amount of debt you have, many borrowers will upon approval used borrowed sums to help pay off all your existing debt with that loan.
By having only one payment to make every month instead of several, and you’ll save money on interest. Coupled with more comparable loan terms, borrowers may be left with a more favorable timeline to pay off your debt. That can help you not only help you save on interest payments but also to get on track if your debt was previously on revolving lines of credit, such as credit cards.
Keep in mind, if you’re planning to consolidate debt, make sure that the amount of money you save will be greater than any loan fees you need to pay, such as origination fees. Then to keep borrowed sums reasonable. Securing financing that could realistically be paid off within 1-2 years. And for debt consolidation using unsecured lines of credit, including top balance transfer credit cards, look for offers featuring 0% intro APRs offering introductory periods lasting 15 months or longer.
Use a personal loan to make money
As the old adage goes, sometimes you have to spend money to make money. Except for those times when you don’t always have the money to spend. In that case, a personal loan could be a wise decision. Such as when you are financing a business expansion that could lead to greater profits, paying for a home remodel that will boost the value of your home, or taking a course that will improve your career prospects.
Regardless of the occasion, you are taking out a loan for you’re obviously taking a calculated risk here, and there’s a chance that you’ll lose money. As every business expansion or personal venture cannot guarantee successful, home remodels don’t always increase a home’s value, and courses don’t always lead to better career opportunities. If things don’t turn out as you planned, you’ll still be responsible for paying off your loan.
That being said, if you’ve done your homework and know all the risk factors involved, there’s a good chance these opportunities will work out. If this is the case for you, terms of personal loans may be your best option. As some of the best personal loans often have low-interest rates that make borrowing very affordable. While the versatility and low cost of these loans can be considered added perk, be sure that in these situations you are borrowing money that makes sense. So that your loan warrants the risk of adding on new debt.
One way to help you better venture into responsibility borrowing personal loans as a consumer is by checking out various rate generators. Applications that help borrows visualize the debts they are undertaking, the effects these loans can have on their personal credit scores, as well as better understanding their rate of interest and net gain. These free services can be greatly beneficial to those securing personal loans at home this season.
Start by building a solid borrowing foundation
Being a responsible borrower often begins before you ever go to a financial institution for a loan. Establishing good relationships with your lender can be a huge help when money gets tight. Knowing your credit score, maintaining an above-average score, and even having a working, knowing your debt-to-income ratio each month, having a working list of business and personal collateral, maintaining up-to-date insurance information, and having an ongoing relationship with your potential funding institution before securing funding are all great ways to start.
Don’t take the first offer
When it comes to getting the best offer on consumer loans, it’s always best to shop around and compare loan products to make sure you’re getting the best possible terms on your loan. Always make sure to read the fine print, and ask questions about interest rates, early payment penalties, and other fees and charges. This will allow you to know that when it comes to borrowing the funds you need, you’re getting the best rates and terms possible!
When you have emergency expenses you need to pay immediately
You may find yourself in a situation where you don’t have the money for an expense, but there will be steep consequences if you don’t pay. Situations including costly car repairs, medical bills, large ticket purchases, unforeseen home repairs, and to pay for weddings. Instances that would ideally be covered by an emergency fund. But when an expense is bigger than you can afford and you don’t have any other viable options, a personal loan is one solution.
In any of the above-mentioned potential scenarios taking out a personal loan could be the right decision. To figure out if you’re making the right call, ask yourself these questions before applying for a loan: Am I going to save money by consolidating my debt? Will this give me a real opportunity to make more money than I’m borrowing? And is this for an urgent expense that I absolutely need to pay? If you answered yes to any of the above, then you can feel confident in your decision to take out a personal loan.
Once you’ve ascertained your reasons for borrowing, its time to vet the market to find your best options for personal loan providers. Whether you’re looking to pay off debt faster by slashing your interest rate or needing some extra money to tackle a big purchase, you’ll want to make sure you are borrowing from a lender with experience in providing consumers like yourself with the best options for repayment terms and variable interest rates.
One such lender to consider is Gladiator Lending. A company focused on the relationship-based lending process that enables you to create, fund and manage business borrower relationships from one loan experience to the next. It is commercial lending software designed with both borrowers and lenders in mind, incorporating all-digital loan origination. To help consumers like yourself the opportunity to save time, automate payments, and improve the overall borrowing experience.
In all, responsible borrowing, for both business and personal loans, can be one way to help make your future financial goals possible. And one of the most important advantages of following these tips is that they provide you with even better opportunities down the road to expand your business, borrow at better rates, or even sell.
Friends, do you have tips for better borrowing practices for your home or business? Share your thoughts in the comments below.
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