There are times when you have some financial issues that need immediate attention. You may not have enough money to solve these issues, resulting in seeking money from other sources. Family members and friends can easily assist with some of these issues, but there are some issues you may need to seek financial institutions for assistance in the form of a loan.
Nobody enjoys seeking loans, but it is almost inevitable at some point in one’s lifetime. It is okay to seek loans to solve pressing financial issues, but you must learn how to do it correctly. Some problems might have other alternative ways of solving them better than seeking loans. Answering the right questions before applying for a loan will serve as proper guidance.
This article gives you the right questions to answer before applying for a loan.
What is a loan?
Many people have ideas of what a loan is. But according to The Economic Times, a loan can be described as property, money, or other material goods, given to another party in exchange for future repayment of the loan value plus interest and additional finance charges. People usually take loans when they are down financially and need funds to solve urgent issues.
When you face an unexpected bill, such as an emergency hospital bill, that you need to pay ASAP, you might want to take a loan, and they mostly have interests attached to their repayments. The urgency of solving the problem requires you to take a loan, but there are things you should consider before taking a loan.
Top 5 Questions to answer before taking a Loan
You may need a loan to address some personal financial issues, which is okay. But doing it correctly so that it will not affect your financial health is very important. Some of the questions you should answer before taking a loan are below.
1. How much do I need?
Before applying for a loan, you need to know how much you need to cater for your need at that moment. If you require not so much money, you can source the money from your family members or friends. If the amount you require exceeds what your family members can offer, you can seek loans from loan service providers.
Earnipay, for instance, offers employee loans of up to 50% of an employee’s annual net salary. You need to check the amount you need with the maximum the loan service provider you’re choosing can offer.
2. How long will I have to pay back?
Another thing you need to consider is the loan period. Is it something you can work with? Can you recover the money within that period? Knowing the answers to this will help you prevent the accumulation of interest.
Earnipay offers loans to employees, and the repayment plan follows the salary payment schedule the employee works with. Therefore the pay period usually depends on your salary period. People find it easy for their loans to be deducted from their salaries rather than them sourcing the payment to settle their lenders.
3. How much will I pay in interest?
Another vital question to answer is how much interest you will be paying after taking out a loan. You should know the interest rate the loan service provider you seek is offering. You need to go with loan providers with low-interest rates so your repayment will be easy.
With Earnipay, you can take a loan of up to 50% of your annual net salary at a 3% monthly interest rate. So, for instance, if you are taking a loan of ₦1 million, you will be paying ₦30,000 interest on your loan at the end of the month.
4. How soon do I need the funds?
Do you need the funds urgently? If yes, you should go for a loan service provider that doesn’t delay before they fund your account with the required money.
5. What other choices do I have?
Sometimes what you need is something other than a loan. There are many different alternatives to taking a loan. Early access to your salary might solve your current financial problem.
For instance, with Earnipay’s On-Demand Pay, you get early access to the salary you have worked for without waiting until the end of the month. This alternative will go a long way to help you with the funds you need to pay your emergency bills on time.
Sometimes, taking a loan becomes mandatory for us as we have an urgent problem to find a solution to. Loans are not always advisable to rush into, but with the proper steps and by answering the right questions, you can be on top of your loan game for your healthy finances.
When seeking loans, you have to be sure there are no other alternatives, such as On-Demand Pay to help you solve your financial issues. You have to ensure the loan provider repayment terms are good for you. If everything checks right for you, you can take out a loan.
To take out an employee loan from Earnipay, you must show your interest to your employer, who will submit a request to us on your behalf. To learn more about the employee benefits Earnipay offers, head to https://earnipay.com/employees.