Keep your options open and plan your budget when considering a loan

0



Today, consumers are not lacking in options for their credit needs. Whether you’re remodeling a home, buying a boat, consolidating debt, paying for a wedding, or just looking to get and build your credit score, there are loan products designed for different purposes and with terms to suit many budgets.

While determining which loans are best for specific purposes and budgets can seem overwhelming, there are some basic steps you can take to sort your options and manage your finances wisely.

Talk to your banker
A thorough review of your accounts, budget, income, and financial goals is a good first step.

Your banker can help you with this review and advise you on the best options. For example, if you’re just starting out with building credit and want to build a good history for large purchases later on, opening a reward credit card can be a big step.

Develop a plan to only use the credit card for certain purchases that you would normally use cash or your debit card to make, and then set that money aside to pay the credit card bill in full each month. This way, you will establish a good credit history and avoid piling up revolving debt.

It is important to avoid accumulating credit card debt or taking out a high-interest “payday” loan, as both can create a cycle that can affect your finances and your creditworthiness.

To have a plan
If your credit is more established and you’re looking for a cheaper interest rate option for a big purchase or a debt consolidation, a personal loan may be a good fit.

Personal loans are unsecured, meaning you don’t need collateral to get the money you need and are fixed at a fixed amount that you repay over a period of time. These terms will help you determine how much you can afford over the life of the loan.

A personal loan can be a particularly good option for homeowners who want to remodel but don’t have enough equity to build a home loan. Personal loans are also great for smaller projects, as you can borrow from $ 2,000.

Other options for those with home equity or savings could be a home equity loan or line of credit (HELOC), or take out a smaller loan for a project while using cash.

The key is planning a strategy that best uses your financial condition and expected future expenses as a guide.

Protect your future finances
Part of your plan should include emergency preparedness. Also, consider your emergency savings status when determining how much you need (and should) borrow.

Make sure the amount and terms you borrow do not overwhelm your budget and leave you in a precarious position should a medical or other emergency arise that you cannot immediately afford.

It is important to avoid accumulating credit card debt or taking out a high-interest “payday” loan, as both can create a cycle that can affect your finances and your creditworthiness.

Protect your funds
Every year Americans are entitled to a free credit report from any of the three major credit reporting agencies Equifax, Experian, and TransUnion. Make sure you get these reports and review them carefully. If you notice any discrepancies, report them immediately.

You can also set up bank and fraud alerts through your bank’s mobile or online site, as well as on any credit card accounts you have, to monitor and protect your funds.

By taking these steps you can ensure that you can continue to maintain a healthy credit build and your financial future at every stage of borrowing you find yourself in.



Share.

Comments are closed.