Everybody wants to see people succeed, and often, this is why many people have historically relied on friends and family to help out when the need to pay or an engagement ring. Borrowing you’re your nearests and dearests is a good way to avoid exorbitant interest rates, and if you’re lucky, your close ones will be happy to help out.
But let’s be real – is it fair to expect your family to foot the bill for your engagement? The easiest way to avoid friction or awkwardness in the future, is to carefully plan, and rather choose another option that lets you finance your own purchase without leaning on friends and family. A formal loan comes with guidelines that are designed to keep you committed to paying it off, and removing the emotional element that comes with borrowing money from friends and family, is avoided.
Keep it clean
Any form of loan comes with a set of guidelines, and remaining sensitive to these requirements will ultimately leave you in better financial standing at the end of the loan, than if you hadn’t. Remember that a high credit score can result in lower interest rates, whereas a lower credit score can result in the opposite. If you can adhere to certain guidelines that set you up for a better credit rating, you will be glad you did, in the long run. Any amount of interest saved on a purchase amounts to a discount!
Are you getting the best deal?
All forms of financing come with their own ups and downs. Let’s look at a few options to help you make a better decision when the time comes:
The interest rate you are awarded makes a difference to what the loan costs you overall. Make sure to test and compare all you options before committing!
What should I check upfront?
Double check your contract for application and disbursement fees, as well as penalty and late payment fees, should they be incurred.
Confirm your loan amount. Different lenders will make different decisions about how much you can borrow. Maximum loan amounts vary from $25,000 to about $40,000, depending on your credit rating, but a you should be able to get away with a smaller amount for a more modest ring.
Aiming for a longer loan term is tempting, as the monthly payments go down when the duration goes up. The inconvenient truth is that the longer your loan run, the more interest you have to pay. The sooner you can repay the loan, the better.
The state of your credit score directly influences your interest rate. Some lenders won’t even consider applications from those with poor credit scores. The lower your credit rating, the higher the interest rates you’ll have to deal with.
Think about it
In summary, it is worthwhile to review the state of your credit score before venturing out to apply for a loan. Paying more than you need to is bad enough, but planning and paying for a wedding when you are already in debt, is definitely a n go!