Financial Goal 411: Compare the Best Loan Rates
There will most likely come a time when you need a loan. No matter how well you have or have not managed your money, it will happen. You could need a loan for any number of reasons. It could be for a house, a car, or an emergency that comes out of nowhere. Before you consider signing the paperwork for a loan, you should try to find the best loan for you.
You should also know how much you can afford to pay each month for your loan. If you do not have a budget or some type of financial plan, you could not possibly know how much money you can afford to pay. Continue reading to find out more about how to pick the right loan for you.
Why Would I Need A Loan?
When you think you might need a loan, you should compare the best loan rates. Before you even do that, you should determine why you want a loan.
While it may seem like a good idea to take on a loan because it gives you immediate access to money you would like, it may not always be in your best interest. You always have to pay back a loan. You will be required to make regular payments each month until the loan is paid off. This could be three years but could be as long as seven years. At the moment, you may feel desperate and willing to agree but do you really want to be tied to making that kind of loan payment for that long?
Common Loan Definitions and Related Terms: Lending 101
Perhaps you can afford to make that kind of payment each month, but you need some help now coming up with the full sum all at once. In the case of a house or a car, taking on a large loan for many years may be the only way you can make those purchases. You must make sure that the purchase makes sense and is a smart one for you. If you are considering a loan to replace the furniture in your house, maybe that is not the best idea. You could try to save the money for the furniture first. It may take a little longer, but you will not have a hefty bill to pay.
How Can I Find the Best Loan Rate?
While it may seem that the interest rate is the only concern you should have, it is not. Lenders also Charge fees. You want to make sure you understand all of the fees before you agree to a loan. So, first let’s take a look at:
Why Should I Look For the Best Rate?
You may think a loan is a loan and they are all the same. You would be mistaken and could pay a lot more money for that incorrect thought. You could compare the best loan rates to make sure you are getting the best loan for you. Just like you shop around for the right car for you, you should also shop around for the right loan. All loans are not the same. You want to compare the interest rates across many different lenders to make sure you are getting the best one. Here you can take a look at a list of lenders who may give you a mortgage loan, based on the information you put in:
Lenders charge interest on the loan. This is basically a fee they charge you for allowing you to borrow the money. These rates can vary from 5 percent to 36 percent. A quick way to determine what that means for you and how much money you have to pay is to do an easy math problem. I know, no one wants to do the math, but it is important here because you need to know how much you have to pay each month:
If you want to borrow $5,000 and you are going to pay that back in 36 months. If you have a zero-interest loan, which basically never happens, you will pay $138.89 each month for 36 months.
$5,000 divided by 36 = $138.89
Now, let us add a 10 percent interest to that loan. When you add 10 percent to $5,000 that adds $500 to the amount of your loan and brings your loan amount to $5,500.
$5,500 divided by 36 = $152.78
These are small numbers so the payment amount is low, but it adds up quickly. I’ll show you one with larger numbers. If you want to borrow $20,000 and you have a loan with 15 percent interest and you are going to pay back the money in 36 months it looks like this.
15 percent interest of $20,000 = $3,000
$20,000 + $3,000 = $23,000
$23,000 divided by 36 = $638.89
Is My Credit Score Relevant?
There are other factors that will impact the amount you pay for a loan. These factors include your credit score. The higher your credit score is then the lower the loan will be. The amount of money you want to borrow can make a difference. Lenders feel that the more money you want to borrow, the more risk is involved with the loan. When a lender sees risk, they charge more interest. The longer you want to take to pay back the loan may impact your payment amount also. The longer you want to extend it poses more risk to the lender and prompts them to charge more money.
Do I Need A Budget?
If you do not have a budget, you should create one. Even if you are not interested in a loan, you should still have a budget. A budget helps you to understand how much money you have and how much money you spend. It can help you create and stay on track with your money goals. If you do not know how much money you have each month, there is no way you are saving or spending appropriately. If you create a budget, you may find that you do not even need a loan. You just need to limit your spending and then you will have the money you need.
Budgeting Basics Spelled Out: Budgets 101
I know that creating a budget seems tedious. It probably seems tedious to compare the best loan rates, also. These are important steps for you to take to ensure your money is working for you. These steps put you in control of your money instead of your money controlling you. It puts you in a place where you are thinking about the money you are spending instead of just spending it with no thought.
While it is much more fun to just spend your money and not have serious thoughts about it, that can put you in a bad place in just a few years when you find that you have no money saved and you are drowning in debt. You can get ahead of that by taking some easy steps to figure out your goals and put a plan in place to work towards them.
How Do I Organize My Finances?
In general, I believe that organizing anything is the way to go. When items are neat and tidy, they are easier to find and remember. When you have some organization in your life, especially with your finances, it makes it easier to track and control. If you do not have your finances organized, you might miss paying a bill.
Perhaps you do think missing one bill, or paying it late is a huge deal, but it can be. Just one late payment can impact your credit score. When your credit score is impacted, it has a ripple effect. You may not be able to get loans, insurance, housing, and even a job. Some potential employers look at credit score before hiring and if it falls below a certain level, they will not hire you. They think you might be a risk and will look at other applicants.
Once you get behind and have created a mess with your finances, it is harder to clean it up. It will seem like an uphill battle. Once you get control and organization, it all seems easier. You know your bills are paid and on time. At any given moment, you know how much money you have to spend. You also know how much money you have saved. While it may feel rigid while you are in the planning and organizing stages, it is all worth it in the end. When you are ready to compare the best loan rates, you will know what you can and cannot afford right away. This can prevent you from taking on a loan that you will not be able to pay.
Should I Create Financial Goals?
Yes, you should set goals. Most importantly, they should be goals that you want to set for you. They should not be goals someone else has told you that you should have. Your goals will change based on where you are in your life. Goal based financial planning is so important for you to live a financially smart life. You should take the time to really think about your goals. You want to think about them for today, but also for your future.
11 Important Tips to Reach Your Financial Goals
Your goals are intended to give you somewhere to go. They are intended to keep you motivated towards working on something that is important to you. They can help you understand what about your finances is important and guide you in making decisions. For example, you decide that a short term goal is to save a certain amount of money for a house down payment. You put a plan in place to save that money in 18 months, but you have to be careful about all other spendings.
Your friends invite you to a weekend away. Normally, you would jump at the chance to go and spend the money without thinking about it. Now, you have a house goal and that makes you pause. Is this weekend away worth delaying your house goal? Maybe it is, but at least you have considered the consequences and understand that the weekend will delay your house plan.
How Do I Create Goals?
I would say it is true of anything in life that if you want to achieve something, no matter what it is, you may have some type of goal to get there. Creating goals is probably much easier than you think. You need to have a clear understating of what you want. You should look at what you want right now, what you want in a few years, and what you want in 20 years.
Those goals may include getting out of debt, buying a house, and having enough money to retire. Those are all important goals. Some of them are short term, while others are long term and you approach them differently. It is important that you understand the difference in how you approach them. Once you determine your goals, it is important to create steps to get there. You have to have measurable goals within the larger goal. This helps you see your progress. It helps you understand that any sacrifice you are making to get to your goal is worth it.
Should I Use A Financial App?
Organizing, tracking, and maintaining your finances can be challenging for you, especially if you have never done it before. You will not be able to meet your goals if you do not create goals to reach. The good news is there are many resources available to help you along your way. Most of us use our mobile devices all day long and they are an amazing resource for us.
One of the best resources is always in your hand and that is your smartphone. There are financial apps to help you meet your goals. They can help you improve your habits, create better ones, and stick to the new habits that you create. Each app has a little something different to offer you. You may need to play with them to find the right one for you. The apps are free, but some of them do have some enhanced features that you may have to pay for to unlock.
Is Obtaining A Loan A Good Idea?
In reality, you are the only one that can answer this question for yourself. The two most important questions you should answer for yourself before you jump into a loan are can you afford to repay the loan. The second item you should do is compare the best loan rates to make sure you are getting the best loan for you.
The bottom line is if you cannot afford to repay the loan, you should not take on the loan. You must repay the loan with a regular monthly payment. If you do not make those payments, it will negatively impact your credit score. Not only does it impact your credit, but it causes a large amount of stress when you are not able to make your payments. When you are in need of money, putting yourself in an even worse place is not a good idea and does not feel good at all.
For these reasons and many others, you should not jump into a loan without really thinking it through.
Make Smart Financial Decisions. Achieve Your Goals.
The Goalry Mall Is Here to Help You. Visit Us NOW.
Conclusion
When it comes to finances, if you have a budget and you have goals, you should be able to keep yourself on track. The key is to create a budget and goals early. Once you take those steps, you must stick to them. That may not always be a fun thing to do. It is always more fun to go out with your friends and travel which means spending money. That will not get you closer to your goal.
You should be mindful of every financial decision that you make. When you keep your goals in mind and you consider them when you make financial decisions, it helps you stay in line with your goals, even when that means making a decision that is not fun.