Personal loans are extremely useful, but they can seem daunting at first glance.
Due to their ubiquity, understanding how to obtain a personal loan and complete a low interest personal loan application is very important. We’ve spoken to Bill Tsouvalas from Savvy, who has given us tips and tricks for how to best understand and approach personal loans.
Carefully manage credit cards
Have you ever received a credit card bill that’s made your eyes water? Many of us have been there – you promise yourself that “this will be the month I’ll finally get my finances together,” but you never follow through.
Credit cards are designed to be easy to use, easy to run up a bill, and easy to descend further and further into a financial hole. However, one thing you may not realise is that personal debt can also be your way out of the hole and back into the financial sunshine!
Low interest personal loans can be a blessing. They’re a great way to consolidate your debt (more on that later), and can be a smarter way to pay for personal expenses like medical bills, holidays, weddings, renovations, or school fees.
Now before you jump online or pick up the phone, you need to understand how to complete a low interest personal loan application.
“Your first port of call should be a reputable source of information on the subject,” Tsouvalas says.
“Savvy has a number of informative and educational pages that have been used by thousands of prospective customers to learn about personal loans and borrowing of all types. The next step is filling out an online form then speaking to one of our consultants who can walk you through the process.”
Consolidate your debt
Before taking out a personal loan, it’s important to organise your finances, and ensure you’re in a position to repay what you borrow. For many, managing personal finances will be made easier by initial debt consolidation.
Consolidating your debt essentially means that instead of owing money on your Harvey Norman credit card, Afterpay on a TV, and your bank credit card, you move it in its entirety to one lender or institution.
For example, if you owe money in the form of interest-free loans, credit card debt with minimum card repayments, and pre-existing personal loans, it’s best to put that all in one place or “consolidate,” so it’s easier to organise your money and pay everything at a lower interest rate.
This will make it easier for you and your broker to focus on setting in place a plan to successfully repay your debt prior to borrowing to facilitate your lifestyle or pay for unexpected expenses that life throws at you.
Understand & prepare for interest rates
Once you have consolidated your debt, it’s time to get your personal loan, though be aware that not all personal loans are created equal.
Some have more competitive interest rates than others, which means not all personal loans will cost the same to repay. For example, take out a loan for a holiday with a 3% interest rate and one with a 5% interest rate, you’ll end up paying a lot more on the latter because of the higher rate.
It’s important to compare interest rates prior to obtaining a loan, and with access to more than 25 of Australia’s most trusted personal loan lenders to help you compare and secure a rate that’s affordable and tailored to one person, Savvy will guide you through the process.
Plan your repayment schedule
A personal loan has a repayment schedule designed to pay down principal plus interest, so the loan is paid out in a timely period.
It’s important to know how much you can pay off before the end of the period, which payment timing will affect your interest rates, and how much you are expected to pay.
If you follow these four tips, then you can take out a low interest rate personal loan safe in the knowledge that you have all of your bases covered.
For more information or to speak to a trusted consulting broker, visit Savvy.
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