A mum’s life is filled with unexpected events and big occasions that can require a little more cash than her family might have at the time.

 

If a credit union loan or overdraft won’t cover it, there is the option of a personal loan; however, there are a number of things to think about before you go down this route.

 

Here are some questions to ask yourself when thinking about personal loans, thanks to ConsumerHelp.ie.

 

Do you really need the loan?

 

If you’re getting a loan for something that isn’t immediately necessary or is something you could spend six months saving for, it’s important to ask yourself if you really need to take on a loan. While it is nice to get the money you want quickly, keep in mind that borrowing costs you more as you’re required to pay interest.

 

 

How much do you need?

 

Sometimes when people are taking out personal loans, they’re tempted to tack a little bit extra on to treat themselves or maybe even provide them with a financial cushion. However it’s important not to take on more debt than you really need to. Not only will it cost you more in interest charges, it increases the size of your payments, which could put pressure on you down the line.

 

Are you willing to pay the extra cost?

 

Credit always comes at a cost. You pay interest on what you borrow, so it costs you more to borrow money than if you pay for something with your savings.

 

 

Will you be able to afford the repayments?

 

If you lose your job or your working hours are reduced, will you still be able to afford the payments you’ve agreed to? If you run into problems repaying a loan, your credit history may be affected and you could have difficulty borrowing money in the future. You should also factor in unexpected costs (a regular occurrence in a mum’s life) such as dental bills and car repairs, and make sure you have money left over for emergencies after making your loan repayments each month.

 

How long should you borrow for?

 

The longer your loan lasts the more it costs you in interest, so don't borrow for longer than you need to. Try to match the term with the reason for the loan. A home improvement loan can be spread out over a five or seven years as it's an investment, but if you borrow for a holiday, you should have it paid back before your next trip so that you're free from debt as quickly as possible.

 

 

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