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Thursday, August 22, 2019

How to Save Money the Next Time You Need a Loan

I'm very against debt, and advise avoiding it at all costs. But sometimes a loan is definitely necessary, but if you do things the wrong way, you can be screwed financially in the long term. So how can you prevent that? Here's some very real and practical tips on how to be financially smart when taking a loan.

You’re committed to cinching your budget and pinching pennies all year round, but sometimes, it’s not enough. Your savings fall short of what you need to fund a project, make a big purchase, or cover an unexpected expense.

So the next thing on your to-do list? Finding a loan.

If you’re in the market for a loan, make sure you check out this guide. It will help you find the right financing for your needs, so you don’t end up spending more than you have to on your loan.




Borrow for the Right Reasons

A personal loan isn’t like finding a long-lost piggy bank magically filled with the exact amount you need for your expense.

The loose change in your porcelain pig comes from your savings. The cash that makes up a loan comes from someone else’s stash, and you’re expected to pay it all back — plus interest!

Depending on your lender, there may also be other fees you have to pay on top of the money you borrowed.

While these are normal additions to your loan, it’s no fun paying them back. You’ll need to consider carefully whether taking out a loan is worth the extra cost.

Consider a Local Credit Union

When shopping for a loan, people tend to stick with the biggest commercial banks. They’re often household names, so it’s easy to believe they’re the obvious — or only — choice.

That’s what the big banks want you to think, as they slap expensive fees and higher interest rates on personal loans and lines of credit.

You may be able to find a better deal by looking to a local credit union for financing options. A credit union offers the same loans and financing as commercial banks, but with better money management options, better rates, and fast, local approvals.

Automate Your Payments

When you’re busy, something like a bill payment isn’t always your number one priority. Between work, raising a family, and running a household, a due date might slip your mind.

So, you end up paying your loan late. It’s no big deal, right? You’re human!

While it’s true, everyone makes mistakes, missing a payment isn’t one you want to make. You could be slapped with late penalties, and it could hurt your credit score.

Automating your payments is a simple and convenient way of always paying your bills on time. It takes some of the burden off your shoulders, as your bank or credit union will remember to withdraw cash from your account every month.

Make Additional Payments

The biggest cost of borrowing money always boils down to interest. It accrues everyday, so the longer you have a loan outstanding, the more you’ll end up owing.

You stand to save a lot of money if you can shorten your repayment period. This is especially true of any loan with a high APR, like a credit card.

Look to your budget and observe your spending habits. Slash any unnecessary expenses to free up more cash and use it to double down on your loan payments.

Borrowing money may be a normal part of running a household. After all, more than two-thirds of adults have taken out a personal loan. But that doesn’t mean you can pick any old loan to help you meet your goals.

Shop around and manage your payments wisely. These tips will help you save money the next time you have to borrow.

See my disclaimer

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