When applying for a loan, one may face the dilemma of determining just how much money one intends to borrow. Applying for a loan is an act that needed planning. It is never done spontaneously.
One of the preparations that a loan applicant must do is to determine just how much he intends to borrow from the lending company. In determining how much a loan applicant must borrow, here are some ideas that will be helpful.
Budgeting Wisely
To budget wisely is not just about doing the math right or choosing the best deals. Budgeting wisely involves knowing the purpose of the personal loan. The purpose of the loan will give an idea about what will be the expenses that will be encountered. And once the borrower is aware of all the expenses that he will be facing, he can borrow enough funds for it. Borrowing money which is less than what is needed has no effect at all.
For example, a person needed £10,000 for a trip. If he borrows only three quarters of it, £7,500, then he will never be able to conduct the trip. The insufficient loaned amount will go to another purpose which is other than the trip. Therefore, the borrower must draw up a budget before applying for a loan.
If the personal loan is for taking the family to a holiday vacation, then the borrower must budget the travelling expenses such as the airfare (or train or bus or boat). Then, he should include other related expenses such as travel insurance, car rental, hotel accommodations, communication expenses, food expenses, and money to spend in buying souvenirs.
Borrow Extra Money for Unexpected Events
After the borrower has budgeted appropriately, he should think about borrowing extra money. The extra amount will be for expenses that are unexpected or unforeseen. This is because no matter how intensive the budgeting is, there will situations that bring about more expenses.
For example, a borrower applied for a loan which is intended for making home improvements, such as constructing an additional room. But during the period of construction, the borrower realizes that the prices of construction materials were underestimated. This will seriously affect the home improvement. Then, the borrower will also find aspects in the house that needed to be fixed. This will entail expenses.
Borrow Extra Money to Save Money
This loan application tip sounds contradictory. But the borrower must realize that loans for smaller amounts are charged with higher interest rates. The loans for larger amounts are charged with lower interest rates. But should the person do with the extra money. This extra money should be saved in a savings account with high interests. This will help the borrower pay off the large loan.
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About The Author
John Mussi is the founder of UK Personal Secured Loans who help homeowners find the best available loans via the http://www.uk-personal-secured-loans.com website.
[tags]loan, loan application[/tags]
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