Doing your own financials can be a real pain in the neck. There are lots of pitfalls and issues that can crop up and surprise even the most business savvy Australian. For regular people, business needs come in the form of loans. There are loans available to help out in different areas of our lives, and each has their own paths of confusion for you to wander.
One of the best things you can do to help your financial situation is to discover the right loan for you. The answer is different for everyone, as everyone has different needs. Whether they need car loans from Latitude, or a loan for their mortgage, having a clearer path towards the right choice will definitely come in handy.
Here are some steps that you can take to see which loan will help you best in your life.
Money & Cost Assessment
A good first step for taking a loan of any kind is to know how much money will be required. You’re looking for a loan because you don’t have the cash right now. This gives you a good starting point to look for loans. Know your range before asking, as a lender will use this to see if you understand your financials well enough to warrant the loan.
Loans come with interest rates, so the cost of the loan should be taken into consideration as well. Don’t be afraid to ask about the annual percentage rate (APR) as well as analyse the interest rate. The APR includes additional fees that may not be evident right away, so it’s good practice to look at this aspect when looking for a loan.
What’s the Term?
Do you need to pay everything back in 6 months? Is the loan due in 20 years? Is it somewhere in between? The answers to these questions depend on the kind of loan you are after (we’ll touch on these soon). The bottom line is that different terms come with different repayment schedules. These need to be followed if you want to stay in your lender’s good graces.
When Do You Need the Loan?
Most people don’t go looking for a loan to be “picked up later”. Often, the loan is required ASAP. The sooner you need the loan – and the higher that loan is going to be – the more you tend to pay for that loan. If you don’t need it right away, the loan will definitely be more affordable.
What Kind of Loan Do You Need?
Loans are structured differently for different items. These are very standard loans that people apply for and receive every day. Which fits you best?
Student Loan
If you’re going to University, and you don’t have someone else paying your way, a student loan is definitely something that will help you pay for classes. It’s good to determine how long a term you want with this loan sooner. You can figure out your term a lot easier by understanding your current income and means to pay it off. Paying it off sooner means less interest, as discussed before.
Car Loan
Are you in need of a vehicle, but can’t pay cash for it? A car loan is right for you. Car loans can be more of a challenge for people with credit issues. With that said, making payments on that vehicle helps build your credit – they may just have some more firm terms than they would for a person with a better credit rating. Ask about loan features that could hurt you down the road like making extra payments without any penalties, choosing your own payment period and additional hidden fees.
Home Loan
Buying a home is a big step. Getting a loan to help with your payments will help you make that step. You have two primary payment options for best home improvement loans: principal and interest payments; and interest-only payments. The principal and interest payments option means your payments go towards both the borrowed amount and the interest on that amount, and interest only payments are, well, pretty self-explanatory. Each has their benefits, and each will satisfy different homeowners in different ways.
Business Loan
Are you a business owner looking for a leg up? Business loans are great for helping people realize their dreams. When it comes to business loans, you can use them differently. Realistically, you’ll need them more for a one-time purchase than recurring expenses. Buying a building, a piece of equipment or whatever thing your business needs to get off the ground are perfect examples of why you’d need a term loan.
Find the Loan That’s Right For You
Loans don’t have to be confusing. There are many loans to choose from, and different things to consider. But once you’ve figured out how much you need and when you can pay it off, everything will fall into place. With a bit of know-how and some research, you can find a loan that will fit your needs perfectly.