A personal loan can be a great tool to help finance your next big purchase, home renovation, business expansion, a new car or anything else that might require some extra money. Personal loans can vary in amount and type, but they are typically smaller than a mortgage. They can even assist you in saving money when you consolidate a number of other loans into one, thereby often decreasing your interest and simplifying your payments, keep this in mind before you apply for another credit card!
You can also avoid spending more money than you need to throughout the duration of the loan by following these 5 easy money saving tips:
1. Plan Wisely
Research your big investment thoroughly before even applying for a loan. Investigate different sources for your purchase, create a budget and stick to it! When you have confirmed what you think your final loan amount is going to be, use a personal loan calculator to find out what your estimated payments are going to be (they could be weekly, fortnightly or monthly) and whether they are reasonable and fit into your current budget.
2. Optimise your loan
Your personal loan has many different variables, from amount and type (variable or fixed rate interest rates) to duration and fees. You need to find the right combination of all these factors to make sure you get the best personal loan available to you. The best way to do this is often to use a personal loan comparison to make sure you are getting the perfect deal.
3. Be prepared
Once you have done your research, worked out how much you can afford to pay in monthly payments, compared personal loans and decided on a provider, get all your documentation together. Different personal loan providers need different things, some paperwork you may need to collect could include:
- Payslips and tax returns
- Credit card statements
- Confirmation of current employment
- Copies of I.D ( this may include copies of your passport, driver’s license, Medicare card and others)
- Written references
Before you sign the loan, make sure to read and understand all the fine print and if you don’t understand something, be sure to ask! Once the personal loan is approved, put the money to good use as quickly as possible, otherwise it will sit around costing you!
4. Automate your payments
Some personal loans often have penalties for missing/late payments and that is the last thing you need when money is tight! Setup a direct debit for the regular repayment. You could even schedule the repayment the day you receive your wages so you know there will always be enough funds for the direct debit
5. Speed up repayments
Some personal loans allow you to pay the principal loan amount back quicker than you initially agreed to. If your circumstances allow it, you should definitely pay more than your minimum repayments as this will allow you to pay less in interest and could even help your credit score.
When it comes to personal loans, research and planning ahead are your friends. From comparing different personal loans to calculating your repayments, forward thinking is essential in finding the right personal loan and paying it off quickly and successfully.