Borrowing money can be quite easy these days and borrowers get money for all sorts of reasons. You might, for example, decide that you would like to borrow some money so that you buy more things for your hobby, whatever that might be. However, you might wonder whether borrowing for this purpose is a sensible idea. Some people do feel that only loans for certain purposes are worth getting, whereas others may feel that borrowing is okay as long as you have done your research first. It is worth asking yourself a few questions and using the answers to help you to decide.
Is there an alternative to a loan?
It is wise to start with thinking about whether there are alternatives to borrowing the money. Make sure, to start with, that you do not have any savings that you could use instead. This would be a far cheaper way to get what you need. It can be hard to spend savings, particularly if you have worked hard to get them or have them ear marked for something but it is far cheaper than borrowing money and you will be able to replace them again. If you have no savings you could consider saving up for what you need. Obviously, this could take a very long time if what you need is particularly expensive and you may feel that you do not want to wait or that you will find it too difficult to save the money. It is worth remembering that the loan will need repaying and you will need to put money each month towards doing this. If you decide to save up instead you could put that same amount of money into a savings account monthly and then once you have enough, buy the items that you want. This will be a much cheaper way of doing things as you will not have to pay any fees or interest, like you would by borrowing the money.
Will a loan offer me good value for money?
It can be tricky to know for sure whether a cash loan will offer you good value for money, but you should be able to get some idea. You will need to think about the cost of what you are using the loan for. Then think about how much extra you would be prepared to pay for it. This extra should be equal or more than the cost of the loan that you are considering. For example, if you want to spend £200 but feel you would still buy the items if they were £250 then the costs of your loan should come to no more than £50 or else you will not be getting good value for money as you will paying more for the items than you would be prepared to if that cost was added in to the original price.
You therefore need to find out how much a loan would cost you. Therefore, are lots of loans and you will need to find the one most suitable for your needs with regards to how much you can borrow, what the lender is like and what the repayments schedule is. Then you can compare lenders and see how their costs compare. You will find that some are a lot cheaper than others but you need to consider which you feel will be the best. Obviously, you will not want to pay more than necessary but you also want to make sure that you will still be getting a good service form your lender.
Will I be able to afford to repay it?
It is really important to ask yourself whether you will be able to repay the loan. Make sure that you are aware of the repayment schedule and what is expected of you. You will normally need to make regular payments or you may have more flexibility with how much you pay if you use a credit card. Consider whether you will be able to manage the cost of those repayments and whether you will find that easy or difficult. It is worth looking through bank statements to see whether it would have been something you could have afforded in previous months and if not, consider what has changed or what you may need to change in order to ensure that you will be able to afford them.
So it is not really relevant, as to what you are spending the loan on, so much as whether taking a loan is right for you at this particular time. You need to be confident that your finances will cope. You also need to consider the cost of the loan and whether you are prepared to pay that much for it and think about whether there are any alternatives that might suit you better.