Taking a loan has become quite easy in recent times as it can be done right in the comfort of our homes with just our mobile phones and access to the internet. This has eliminated the tedious process of loan application and in turn led to increase in number of people taking loans. Despite the ease in the loan application process, before taking a loan, we should put some factors into consideration to determine if it’s the right thing to do at that point in time. In this article, I will take you through five different factors to consider before taking a loan.
1. Reason for Taking a Loan
The first and major factor you should consider is the reason or aim behind taking the loan. Are you taking it for business purpose, health purpose, school purpose or just for personal satisfaction? In order to avoid unnecessary debt, it is of importance to be sure that what you are taking the loan for is actually crucial and will in turn yield greater returns.
Read: How to Get a Loan from First Bank of Nigeria in 2023
2. Interest Rates
The interest rate is used to measure how much interest your loan will accumulate over time. So, it is of importance to consider the interest rate because it determines how much you will be repaying at due date.
3. Income and Financial Position
If you do not have a stable source of income or you are in an unfavorable financial position that can make loan repayment quite difficult, then you should really reconsider taking a loan to avoid further problems.
4. The Repayment Tenure of the Loan
How long you have until the loan's maturity or repayment date is also important because it allows for accessing if you can meet up with the repayment at that particular period or not.
5. Lender’s Credibility
In cases where the intended loan is not from a reputable financial institution, a thorough background check on the lender to determine its credibility is important before going ahead to take the loan.
In conclusion, taking a loan is not a decision that should be taken with levity. Hence, the need to analyze all of these factors with due diligence to determine if we should go ahead with taking a loan or not. Eventually, if you happen to fall on the favorable side of all of these factors then it is safe to say that you can go ahead to seal that loan contract.
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