Five Basic Factors to Consider Before Borrowing from a Credit Union
Lending and borrowing are two practices that go together. One needs the other to survive. While nobody loves to borrow, certain emergencies and plans that cost more money than you can get could force you to borrow. There are a number of avenues that you could opt for when borrowing including shylocks, payday loans, and credit institutions such as credit unions. Here are some of the fundamental considerations that you must make before applying for a loan in any credit union facility.
Know Your Need
Why do you need the loan? What do you want the money for? Do you want to pay your school fees? Do you want a business startup? Do you want to build a house? Do you want to buy a home? Do you intend to renovate your house? These are some of the most common reasons why people come down to credit unions to borrow. Have your reasons together as they are the guiding factor.
Know How Much
How much money do you need? This is a very important question. It should be guided by the need and should also be guided by your capacity to offset the loan. The truth is you might want to buy a house. However your ability to pay up a loan of such a mount that could buy a house can be in question. Know where you lie. What you can pay for easily. This might require you to reconsider the need.
Know Your Income
According to most credit union loans experts, your income is the basic yardstick by which your ability to pay the loan is measured. You must therefore know what your income is. This means you have to also know your expenditures so that you know what remains on top that could be channeled to paying the loan. The most common expenditures will include rent, emergencies, savings, food, clothing, and utility bills.
Know the Interest
I often advice people to pay very keen attention to the amount of interest surcharged on a loan. Basically, high interest rates could easily mean, your loan can be a bad loan. You don’t want to pay twice the amount of your initial loan. The basic interests can either be reducing or fixed. Ask an expert to help you to understand the following before you commit pen to paper. But the basic guiding factor should be this next point.
Know the Duration
While talking to the few credit union loans experts that I met, the duration of your repayment came up as a very strong factor. In reality a shorter payment term will mean less interest payable on the principle amount and vice versa. The best duration will be determined by you and how much you are willing to part with per month. However in certain cases and after considering the available requirements, your loaning officer may advice you otherwise.
For credit union loans it is very important to consider these five factors that I have mentioned. In fact, it is also vital to have a rough idea of what your loan feels like. In the best case scenario a great loan should be viable and easy to settle.