We have considerable doubts before taking a loan. At least it’s good if we have them. Especially when it comes to very high loan amounts, e.g. a mortgage for building a house or buying an apartment. Taking a loan can affect our whole lives. It is worth analyzing your financial, private and professional situation, and then ask yourself a few questions before you decide to take a loan. What should you think about?
For what purpose
Basically, this question should be asked by anyone who begins to think about credit. And there is rather no person who analyzes loan offers without a designated purpose for which the money will be allocated. However, we recommend that you thoroughly analyze your credit goals. If we need a small loan for renovation, e.g. up to PLN 10,000, we will prepare an accurate plan of expenses that we intend to incur, as well as an analysis of our own salary. It often happens that the borrower focuses only on the decision whether he will be able to get a loan.
When submitting the application, he declares his monthly income, after which, after receiving the money, it turns out that the loan installment is so high that in practice it significantly burdens his home budget. We must avoid such situations. Even for people with high income, repayment of the loan installment can be very burdensome. Why, if the financial means allow him to pay the installment freely? Such a person gets used to a higher standard of living, spends more money. Suddenly, he has to confront his habits with reality, which suggests that after paying the installment loan “for life” much less money is left than could be assumed.
How will we spend the loan amount?
If we take out a mortgage, for example for the construction of a house, if the bank wants to protect itself against non-payment by the borrower, it requires it to certify the completion of subsequent stages of construction. In the loan agreement so arranged, the bank pays the next tranches of the loan to the customer when he presents documents on the progress of construction works. This situation requires a very thorough analysis of the costs associated with building a house before we decide to take out a loan. You should prepare a calculation of expenses, which means that suddenly during a given stage of construction we will not run out of money from credit. What are we talking about?
Imagine a situation where we receive money from the bank to prepare and lay the foundations of the house. We have a certain amount of financial resources to perform the necessary construction works. When we build the foundations, we will receive the second tranche. We start work, but it turns out that we have included only expenses for building materials and payment for the construction team. During the works, it turns out that the ground is wet or very uneven, which requires additional work
We can then use the loan money to cover the required works, but we will run out of funds for construction works declared in the loan agreement. As a consequence, the bank may even terminate the contract with us . As you can see in this hypothetical example, you should carefully plan the release of each zloty from the loan granted.
What loan amount?
The loan amount is strongly related to the purpose for which we draw the loan. However, we want to emphasize that the total amount of credit is a very important aspect, because it can affect our entire future life. If we do not earn much and we take out a huge loan, we must reckon with the fact that we will be able to get rid of loan installments only in retirement. It is worth asking yourself whether we want to repay a large amount of money borrowed to the bank every month.
Where’s the loan?
Perhaps the answer to this question will give us a headache. There are many loan offers. We need to reserve a lot of time to review most of the loans offered by banks, then arrange a visit to a given branch of the bank. Services such as ours can be facilitated by comparing selected bank offers, analyzing the advantages and disadvantages of loans, and offering various types of advice and tips.
Before taking a loan
Many people don’t know what creditworthiness is. They mistakenly believe that if they have never borrowed before, they have a good credit history. Unfortunately, if we have never borrowed money, we are simply unbelievable financially for the bank. It is worth thinking about credit socring and building a positive credit history beforehand. How can this be done?
For many, this may seem like a big surprise, but even buying small items in installments will make our credit history good. Of course, if we pay all installments on time . The attitude that someone does not want to buy in installments in order not to get into debt is commendable. We often say: “I will buy equipment only when I can afford it”. In the case of credit scoring improvement, the above rule does not work. When buying in installments, we actually take out a loan from the bank, and the systematic and timely repayment of the financial liability builds our positive credit history.