Your personal cash flow is extremely important to your well-being, both financial and otherwise. Managing your financial situation can be difficult, and while it’s not feasible for many of us to live debt-free, it is possible to use finance to your advantage. A personal loan is often a great way to consolidate your debts and cover necessary short term expenses in a sustainable way.
Although personal loans are a great tool, you need to manage them carefully. Mismanaging any form of debt will not end well for you and your credit score. We’ve put together six of our favourite tips to help you manage your personal loan, so you can get the most out of it, improving your financial situation and not harming it.
#1: Create a budget and stick to it
It’s probably the most common piece of financial advice you’ve heard, but it still rings true. Creating a budget, or integrating your repayments into your existing one, is the most critical component to managing any form of debt. If your financial situation is under pressure, you’re better off cutting any other expenses and prioritising your loan. Figure out what costs are an absolute necessity and what isn’t. Sacrifice what you need to now, to avoid a struggle later. Whether you have a personal loan or not, you should have an accurate budget – update yours today.
#2: Use your personal loan funds as intended
Another of the most common mistakes we see people make is misusing the funds they obtain from their personal loan. If you access funds for
a particular purpose, make sure they go towards it, as planned. Obviously, it’s not a good idea to access debt just to spend it on a shopping spree or an impulse purchase. Personal loans are a great tool when used appropriately and for a reasonable purpose.
#3: Always make your repayments on time
Missing loan repayments is a significant no-no. The mark on your credit file may last for many years, impacting your ability to access funds in the future. You have two options – set up an automatic transfer or direct debit from your bank account, or set a reminder in your phone a day before payment is due (and act on it!) Not only may interest costs accumulate, but you may also be charged a late payment fee.
#4: Consolidate your other debts
A personal loan can often be an excellent opportunity to consolidate your more expensive debts into a singular, more manageable repayment. For example, credit card debts are extremely dangerous due to their high-interest rates. Clear your credit cards, payday loans and other loans by taking out a suitable personal loan. Of course, make sure the new loan is manageable and likely to save you money and stress.
#5: Don’t ignore opportunities to make more money
Earn more money. Easier said than done, we know! Nonetheless, if there’s one factor that would make managing your financial commitments easier, it would be increasing your earning power. Perhaps it’s a second job, an online business, clearing out old items you no longer need, or simply asking for a pay rise.
#6: Chat to an experienced personal loan broker
If you’ve been active in the financing market over the last few years, you’d know that banks no longer rule the game. The deregulation of the industry, alongside increasingly capable online-only lenders, offer consumers a far wider range of opportunities when it comes to all kinds of financing, including personal loans. Innovative online lenders will offer targeted and flexible loans tailored to your situation and credit score. Leveraging a solid credit score is a great way to secure a lower-cost loan, perhaps even in instances where a bank would not approve you.
“Brokers know all the secrets to a fast and efficient approval.”
Just like a mortgage broker, personal loan brokers have access to a panel of lenders ready to help you source the best deal. It won’t cost you anything to leverage the knowledge of a broker. They’ll help you compare your options and negotiate terms on your behalf. They know all the secrets to a fast and efficient approval, so you can get the money in your pocket as soon as possible.
Capital Plus Finance is an experienced personal loan broker that has your business’s best interests at heart. With a panel of many lenders, The Capital Plus Finance team will do everything we can to help you secure a suitable finance solution. Please give us a call anytime to find out more or to have an obligation-free chat about your personal and business situation.