3 Main Considerations When Getting an Unsecured Loan

Posted on Jan 7 2016 - 8:56am by Admin

Loan Application If everyone’s born rich, then life shouldn’t be this hard. Dreaming aside, you’re likely to borrow money for something you need (or want) at some point. You’re fortunate if you have a wealthy friend who’d love to lend you dollars on your own terms. But, if you don’t have a white knight, like most of the world, then loaning funds from a lending company or institution is usually your best option.

Of all the financial products there is, unsecured loans are the most attractive just because they don’t require a collateral. As Rapid Loans adds, you don’t need to own anything to use as a pawn and still get to lend a certain amount of money. It definitely suits most people’s situation, but its advantages only lie in the hands of the informed.

Most unsecured loans in NZ, Australia, or pretty much anywhere would work just to those who have the forethought to review the terms thoroughly. When discussing your loan, your attention must centre on these:

Monthly Repayment vs. Interest Rate

In the end, you have two choices: go for higher monthly repayments or a higher interest rate. Your decision should be based on your financial situation, and not primarily on what’s convenient for your lifestyle. Enquire what your options are, and suggest if certain scenarios are possible.

Addendum: not all interest rates don’t increase over time. Ask if it’s “fixed”.

Simplicity is Key

Any loan shouldn’t be complicated, so be wary of gimmicks. Not to say that all add-ons are bad, but weigh the consequences of having them and think about their real benefit to your situation. If you could imagine living without them, then you probably could.

Both God and the Devil are in the Details

The rule of thumb is to grasp every single sentence in the contract. Missing a tiny detail could result into a major setback. Your understanding of all the terms and conditions will not only guide you towards making a smart decision, but also keep you from falling deep in a financial hole.

An unsecured loan is never risk-free. Putting a lot of thought before signing on the dotted line makes a world of difference.