Things you need to keep in mind before taking out a career loan
How brilliant must it be if we had enough money for all our needs all around the clock? But the reality of the matter is we never have enough, and this is the reason why there are various lines of credit and loan options available these days. The various financial institutions, including the banks and the NBFCs, use the gap between the aspirations and the reality as an opportunity to roll-out loan offers to individuals.
With the increase in the popularity and the use of the internet, online banking options have opened up avenues to apply and get a loan within seconds. If you are looking for an education loan or a line of credit to help you boost your career opportunities, all you need to do is visit Liberty Lending, online, and talk with your expert today.
However, with any loan or line of credit, there are a few critical considerations that you need to take into account and keep in mind at all times. The following section of the post lists all the factors that, according to our experts, are at the top of the pile when you are looking for a loan to boost your career growth and development.
Read on to know more!
Tip #1: Avoid borrowing more than you can repay
If you are looking for a line of credit for career opportunities, then you need to keep in mind the basics of smart borrowing. The first step is always the age-old golden rule of not borrowing more than you can repay. The idea is to take out a line of credit that you can quickly repay. EMIs should never exceed the 10% mark of the net income.
In extreme cases, you can go up to 15%, but it will surely feel like a pocket pinch if you are a student. It is often the case that the educational loan is not the single line of credit that one can have. So, it is ideal to make sure that you are not spending more than 50% of your net income to make the EMI payments. This is the only way to ensure that you save at the end of each cycle as well.
Our experts would like to point out the fact that it is inadvisable to take a loan just because it is available. Make sure to read the offer document carefully and weigh in on the pros and cons before signing on the dotted line.
Tip #2: Always go for a short tenure loan
Yes, the idea is the longer the tenure, the lower are the EMI amounts. But with the magic of compound interest, the longer the duration of the loan, the more is the payment when it comes to the principal amount you borrowed. It is always tempting to go for the long tenure loans because of the smaller EMIs, but you need to strike a balance while choosing a loan plan for your requirements.
Yes, of course, we understand that as a student, it is not always possible to go for a short duration loan since the net earning is never a huge amount that will suffice for higher EMIs. However, our experts would like to point out that a student can go for increments on the EMI amount per year to pay off the debt faster.
Tip #3: Timely and regular loan payments
Nothing is more important than making the EMI payments on time in case you have open lines of credit. It is vital that you stay disciplined, especially when it is about repaying the loan amount. The more you delay in repaying of the loan, the worse your chances you get for getting credit later on life. This is due to the fact that with each delay, you end up hurting your credit score and annual credit report.
It is never about paying the entire amount as you can at the very least schedule the minimum payment for each month concerning a particular line of credit. Use your smartphone apps to schedule your payments better. Prioritize your EMI payments intelligently so that the more urgent ones get paid off faster. This is the ideal way to avoid falling into a debt trap.
Tip #4: Shop around for the best deal
There are many financial institutions and loaning services that offer up the career and student loans. It is crucial that you keep your eyes open for deals from various service providers. Yes, you can always go for the more popular and reputable lender but do make sure that the offer suits you perfectly.
Shop around for the best possible deal, and if you get hold of a better rate, it is a great idea to switch to the cheaper loan. However, while switching, you need to keep in mind the difference for the percentage points between the credits. Make sure it is at the very least two percentage points; otherwise you will have to pay more as the prepayment penalty.
Tip #5: Read the offer document carefully before investing
In business terms, this is called understanding the fine print. It is imperative that you peruse the offer documents carefully to understand every stipulation. The more you are aware of all the information and the clauses of the contract, the better prepared you are to avoid unwelcome surprises down the line. Keep tabs on the deduction on the loan amount for the upfront interest charge and the insurance premium. Lenders can sneak in points that are, in reality, loaded with financial details against the borrower. So make sure you are aware of your loan stipulations before signing on the dotted line.
Lastly, we would like to conclude by highlighting the importance of keeping friends and immediate family members in the loop about the loan. As a loan impacts the finances for the entire household, it is imperative to discuss the matter at length with friends and family. Also, never borrow money to invest or splurge on a scheme. High return investments are highly volatile, and exercising caution with any loan is a golden rule to live life by. All the best to you!