If you are considering borrowing money, then you may wonder whether it is a good time for you to do so or whether you should wait. There are various factors that you should be considering when you are thinking about this.
When Do You Need the Money?
The first consideration should be when you need the money. If you have an emergency situation then you will have no choice but to borrow right away. This could be that you need to pay a bill, pay rent, buy food or something that that which will have bad consequences such as eviction or hunger if you do not have the money. It could also cover things like car repairs, that if are not done will get worse and be more expensive to fix in the future. So, you need to think about whether you really need to money right now or whether there is some flexibility in when you will need it. You may really want it now, but this is very different to needing it. If you can wait, then it might be wise to wait a while and then you will be able to take time to save up a bit of money and then you may be able to borrow less or avoid borrowing altogether.
Can You Afford the Repayments?
It is also important to look at the repayments and think about whether you will be able to afford these. You need to consider whether you will be able to afford them anyway or whether you will need to change the way that you spend or earn money so that you can afford them and whether that will be possible. It is wise to work out how much you can afford to spend and this will help you to be able to decide whether you can afford the loan. You will find that the repayment amounts will vary depending on which loan you choose and so you may find some more affordable than others. There are even some that are more flexible about when you repay and how much and they could be worth considering. They do tend to be more expensive though but it is worth thinking about whether it is worth it for the flexibility. It is good to work out the full cost of the loan and compare it to costs of other loans so that you can decide whether you think that it will provide you with good value for money.
What are Interest Rates Likely to do?
It is also a good idea to have a think about interest rates. If the loan has a fixed rate of interest then this will not matter as the interest rate will not change at all. However, most loans have a variable rate of interest and this means that they are likely to change during the time that you have them. It is often the case that loan interest rates will go up when the base rate of interest, as set by the Bank of England, goes up. This means that you might want to consider whether you think the rate of interest will go up and if so whether you will able to afford this if your loan interest goes up as a result. This is a very individual calculation and it will depend on whether you feel you will already be struggling or whether you the repayments will be easy. It is worth calculating quite high interest rate increases to work out how much that would impact your loan repayments and think about whether you will still be able to afford them.