Deep, deep dive
Should you get a personal loan?
Before making any financial decisions, it’s always good to ask yourself a few crucial questions:
What am I buying? Do I really need it (e.g. is it for a medical emergency?) or do I just want it (like having a fancy vacation)?
A personal loan is NOT a way to give yourself access to something that you can’t afford. It should only be used for emergencies. Taking on debt by borrowing money opens you up to falling into a vicious cycle of debt.
Am I getting this personal loan to fund an investment?
You also shouldn’t use a personal loan to pay for investments. For example, don’t take a loan to buy shares or to buy cryptocurrencies. You are never guaranteed a return on investments, so taking out a loan to make an investment also means taking on high risk.
Can I use my savings to pay for this item instead? Should I wait and purchase this item when I have some extra cash?
If it’s something you really want, then save for it slowly rather than taking out a loan. Use our savings goals calculator so you can figure out how much you have to save every month until you can afford it.
Am I getting this personal loan to sort out my outstanding debts?
Some people take out personal loans to pay for their other debts, that way they are making only one payment at a hopefully lower interest rate. If this is you, you should first get financial counselling from AKPK to figure out if a personal loan is really the best way to manage your debts.