While it’s usually better to cover any expenses outright, it’s not always possible. If you are in need of quick funds, a personal loan may help. However, before you borrow money, consider the following ten tips for borrowing responsibly in Canada.
1. Know Your Financial Situation
Begin with the basics: your total monthly income and expenses and how much you can afford to borrow/repay. Evaluate your cash shortfall or expense and determine the amount of money you need to cover it. Assess your ability to repay the loan and be realistic in your appraisal of your finances. This may help save you many headaches down the road.
2. Choose a Reputable Lender
Beware of scam artists online. Do your research beforehand: check the lender’s website and contact information. Make sure that the lender has a license to operate in your region. Examine the lender’s online presence and customer reviews. In short, do your due diligence and choose a responsible and reputable lender.
3. Don’t Over-Borrow
While it may be tempting to borrow more funds than you need, personal loans come with an interest rate and fees. Therefore, it’s important to minimize the amount of money you borrow. Only take out the amount you need to cover your immediate cash shortage and develop a strategic repayment plan.
4. Read the Terms and Conditions
Before you take out any loan, it’s important to review the terms and conditions of that loan. Understand the true cost of the loan, including the applicable interest rate and any applicable fees, know the important due dates, and be aware of your rights and responsibilities.
5. Safeguard Your Personal Information
In the Internet era, it’s never been more important to protect your personal data. This is why LendProConnect utilizes secure encryption technology to keep your information safe. When you choose a lender, make sure that they take steps to protect their customers’ personal information. Read your lender’s privacy policy and only take out loans with lenders whose privacy practices you trust.
6. Communicate with Your Lender
If you know that you’re going to be late or miss a payment, reach out to your lender. Keep the lines of communication open – some lenders may be flexible and may work with you to ensure you stay on track with your payments.
7. Limit the Number of Loans You Take Out
Lenders may be less willing to give loans to people who have multiple loans on the go. Each loan entails a certain interest rate and fees, and repaying multiple loans at the same time can be challenging for most people. Having fewer loans out will help present you as a lower-risk borrower to most lenders. This will be advantageous when you apply for a loan.
8. Find Ways to Improve Your Credit Score
If you have a less-than-perfect credit score, it may limit your access to various products and services. It may be more difficult to get approved for a rental or a mortgage or obtain a loan on more favourable terms. To improve your credit score, it’s important to pay your bills on time, maintain a low credit utilization ratio – ideally below 30% – avoid opening too many accounts, and keep old accounts open to help build a more positive credit history. The process will take time, but it’s achievable. To keep track of your credit score and any mistakes on your credit report, sign up for Credit Verify! It only takes a few minutes.
9. Build an Emergency Fund
While it may seem difficult, setting aside even a small amount of money on a recurring basis is a surefire way to build an emergency fund. Saving up at least three to six months’ worth of expenses can help you deal with future setbacks and maintain a greater peace of mind. Today’s economic times make it challenging for many people to establish an emergency fund, but it’s a much-needed step toward financial stability.
10. Make Your Payments on Time
A lender may report your payment history, including late payments, missed payments, or non-payment of your loan, to one or more credit bureaus. Accordingly, if you don’t make your payments on time, it may negatively affect your credit standing. Making your payments on time is crucial to avoid impairing your credit score.
Conclusion
It’s important to approach borrowing with the careful attention it deserves. Follow the above ten tips to make your experience a little smoother. If you need funds to cover an immediate expense, apply online via LendProConnect. We will only connect you with reputable lenders, and you will receive an immediate response. The application process takes place entirely online and is quick, simple, and secure.
