Personal Loans: 5 Questions to ask yourself before applying
Are you asking yourself the right questions?
“Empowerment isn’t about making women strong. Women are already strong. It’s about changing the way the world perceives that strength.”
- G.D. Anderson
W: Welcome Story
Aasha graduated in mass communication and joined a corporate office as a junior content writer a year ago. After 12 months of shaping her skills, she is now eager to soar higher.
She was looking for ways to improve her skills, and a digital marketing course from her favourite creator caught her attention. On reading up, she found out the course’s curriculum was tailored to her current situation.
But there is a catch. The course came with a hefty price tag.
Aasha comes from a middle-class family and she is aware of her family’s poor financial health. She didn’t want to add a burden to their already existing financial woes.
She is also aware of her modest bank balance. She made the calculations—only to realize her savings would crumble under the weight of the course fee, and her monthly budget would be jeopardized.
She was determined and wanted to upskill. But not at any cost!
Instead of going all in blindly, she explored options and made a smart decision.
Aasha explored loan options, considering interest rates, repayment terms, etc. After speaking to a few seniors and comparing different loan options, she secured a manageable loan that fit comfortably with her salary structure by making some small compromises in her daily routine.
She started the course immediately and also began paying back the loan in installments.
Aasha’s story feels like she had no option left but to take a loan. But she didn’t opt for the loan just like that.
She asked herself five questions.
Five Questions Aasha asked herself before applying for a loan
What is the purpose of the loan?
Am I using the loan to fund a necessary expense, such as a home purchase or medical treatment? Or am I using it to finance a luxury item or discretionary expense?
If the purpose of the loan is not essential, it’s important to weigh the pros and cons carefully before applying.
Can I afford to repay the loan?
Before applying for a loan, make sure to create a budget that includes my monthly loan payments.
Be sure to factor in other expenses, such as housing, food, and transportation, to make sure that I can afford to repay the loan without sacrificing my financial well-being.
What are the interest rates and terms of the loan?
When comparing loans from different lenders, be sure to compare the interest rates and terms carefully. The terms include the repayment period, the prepayment penalty, and the late payment fee.
Do I have collateral?
Some lenders require borrowers to provide collateral, such as a home or car, as security for the loan. If I am unable to repay the loan, the lender may seize the collateral to recoup their losses.
If I do not have collateral, I may need to find a lender who is willing to offer me an unsecured loan.
What is my credit score?
Credit score is a three-digit number that lenders use to assess your creditworthiness.
A high credit score indicates that I am a good credit risk and that I am likely to repay my debts on time—and vice versa. I should consider improving my credit score before applying for a loan.
Know more about credit scores and creditworthiness.
A: Actionable Steps
Shop around for the best rates and terms. Don't just accept the first loan that you're offered. Compare offers from multiple lenders to find the best deal.
Get pre-approved for a loan. This will give you an idea of how much money you can borrow and what your monthly payments will be. It will also show lenders that you are serious about borrowing money and that you are a good credit risk.
Read the loan agreement carefully before you sign it. Make sure that you understand all of the terms and conditions of the loan.
Make your loan payments on time and in full. This will help you maintain a good credit score and make it easier to qualify for loans in the future.
There is a misconception in Indian middle-class families that loans are always bad.
Ideally we all want to stay debt-free, but life can get tricky, and situations might push you to take a loan. But this doesn’t always have to be a forced option. It can be a smart decision that ensures your daily routine and regular expenses don't go under significant change.
NerdWallet addresses how personal loans are not always bad and how you can leverage them.
Read the blog here.
T: Thought Leadership
"A well-managed loan is not a burden, but a bridge to financial growth."
This quote underscores the positive potential of loans when handled responsibly. It emphasizes that loans, when managed effectively, serve as a means to overcome financial challenges and propel growth.
By viewing loans as a strategic tool rather than a burden, individuals can leverage borrowed resources to invest wisely, fostering financial development and achieving long-term goals.
Understand your rights against Sexual Harassment
If you’re a woman, you have most likely faced sexual harassment at work, in public places, or even as kids or at home.
Unfortunately, although we all know sexual harassment is real and we see it on a daily basis, we are unaware of our rights and actions when faced with such situations.
Moolah invites Dr. Raina Khatri, CEO of Right2Rise, to address the sensitivity of the topic and educate us about our rights under the POSH Act (Prevention of Sexual Harassment) and what action steps we can take in such situations.
Register for the free event here.
Date: 19th November 2023, Sunday, 6:30-7:30 pm IST
As Me Anything Session:
Meeta answers all your finance questions on the third Friday of every month.
Use this link to register for the session and get your queries cleared!
Date: Friday, 17th November 2023, 6:30-7:30 pm IST
Moolah Wisdom Series on the Moolah Talks Podcast!
“Life is unfair, and it keeps throwing one hardship after another at you.“
When life throws you an unexpected curveball,
Do you have the financial preparedness to tackle it head-on?
Are you confident in your understanding of your investments and the implications of your financial decisions?
If you don’t have answers to these questions, don’t worry! We've got you covered.
Jermina Menon, Retail Marketing Specialist, and Meeta Gupta, Founder and CEO of Moolah for Women, join together to speak on how to make your financial well-being emergency-proof.
Season 2 is LIVE!! Listen to the podcast here.
That’s everything for this week. See you in 14 days.
If you want to ask us questions or if we can help you in any way, you can ping us at email@example.com. We will respond within 24 hours.