Getting a loan is a big decision and it is important to make sure that it is made carefully and at the right time. You may feel that you need to borrow some money to help out with Christmas but is Christmas a good time for a loan?
The timing of a loan
When you take out a loan you normally have to start repaying it very quickly. This means that when you are considering the timing of a loan then you need to think about whether you will be able to do this. Regardless of the time of the year, you will always need to commit to making those repayments and so you need to think about whether this is possible. It is important to think about the long term, rather than just focussing on the short term. Many loans with no credit check will last longer than a year so there may be many Christmases to get through before it is paid off.
Can I afford the repayments?
It is really important to think about whether you will be able to afford the repayments. This isn’t just the ones coming up very soon, but all of the loan repayments. There may be a lot to make and you need to think about whether you feel that you will be in the position to be able to make every one. It is therefore wise to find out exactly how much you will be expected to repay and when and then you can calculate if you can afford it. By looking at your bank statements, you will be able to work out how much money you normally have available and what you have to pay out for and this will enable you to be able to calculate whether this is something that you will be able to afford. It is important to also think about whether you will be able to afford everything else that you need to buy on top of those repayments.
Consider what might happen if interest rates go up as well and whether you think that you will still be bale to afford the repayments then. Also, if you have a change in your income and need to cut back on your spending, think about what you will do in order to make sure that you can still afford the loan. It might seem a bit negative, but it is wise to have a back up plan just in case of any problems.
Am I happy with the cost?
It is also good to be aware of how much the loan is costing you. It can be easy to actually forget that the loan will cost money as it is not bought in the same way as other things that we buy. The cost of the loan will be the addition of the interest as well as any administration and other charges. It may not be that easy to work it out but if you contact the customer service department of the lender, then you will be able to ask them about it. They should be able to do the calculations for you. If you are on a variable interest rate then there will be no guarantee that it will stay the same though. If the rates go up then you will pay more but if they go down, you will of course pay less. This can be very difficult to predict though and so it can be wise to make some estimations of whether it might go up or down in price to help you to calculate this. It is a good idea to assume the worst though and calculate if you might manage if rates go up. You will not have to worry about rates going down as you will be able to more easily manage the repayments if this happens.
Is the timing important?
It is a good idea to consider the timing a little bit and how long term the loan is will have a significant impact on how important this is. If you are getting a short-term loan, then it could be wise to avoid getting it at a time when you are likely to be short of money, such as Christmas. However, if you are taking out the loan for a long time, then you might find that this is not really relevant as you will be having to find the money for the repayments for a long time and so you may come across many times when you are a bit shorter of money. This is why it is so important to research first and come up with a plan of how you will manage if you are short of money. It might be that there are things that you can cut back on when needed or ways that you will be able to earn a bit of extra money from time to time. It is wise to have a think about it in advance of getting out the loan and then you will be well prepared in case of any eventuality.