Next to payday loans, unsecured personal loans are going to have the highest interest rates of any loan type around. That being said, they’re still probably going to be better terms for the unsecured personal loan than for a credit card cash advance, for example. You just need to be both smart and diligent when you’re taking out one of these, and you need to ask the right questions.
So, where do you start? Below are three of the most important questions to ask when taking an unsecured personal loan:
This is the most important question you should ask anytime you borrow money, whether it’s a home loan, car loan, or an unsecured personal loan. You need to figure out if the reason you’re borrowing the money is worth not only the cost of the thing, but the interest and fees you’re going to be paying over time.
There are some good reasons you might decide to take out an unsecured personal loan. For example, you might take one of these out in order to pay off other, higher-interest unsecured debt such as debt from credit cards. That’s a good reason for the expense.
On the other hand, there are some reasons you shouldn’t, such as making a down payment on a car you can’t afford.
You need to be specific about how you can afford to repay the loan. If you can’t afford another $200 a month in debt, then you shouldn’t take out the loan. Just because you think you need the loan doesn’t mean you should take it.
Part of this might be coming up with alternative ways to make money to pay the loan, such as getting a second job.
You need to figure out how much the loan will cost over the life of the loan. Know your interest rate. Don’t get suckered in by a payment amount. Focus on the actual terms of the loan and you’ll be fine.
Accordingly, you should shop around at least a little bit for your loan to make sure that you’re getting the best possible terms available to you.
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