Jan 2, 2015

Do I get a loan or do I stop for a term?

It’s that time of the year again. Enrollment for the first trimester is on. I have no plans of enrolling this term since I will be gone for a month before it ends so I didn’t save for it but my colleagues were convincing me to continue anyways. They said if I stop now, I might just do it again until I forget about finishing it.

In my school, we have to pay it in cash to be considered enrolled the problem is I don’t have enough cash to cover it up since I spent too much for the holidays. To my defense, it wasn’t planned. Let’s assess.

1. How much am I going to borrow?
Check your bank account first. Use part of it leaving enough for your needs until your next payday. We want to reduce the amount of the principal loan as much as possible to minimize the interest that we need to pay for.

2. What are my options?
If the amount of loan you are planning to borrow is not that much, you may want to ask someone close to you first who may possibly not charge you with interest. Check your institution too if you can qualify for a student loan before running to financial institutions.

3. What are the terms of the loan and can I afford it?
How much is the interest rate? Is it compounded monthly or not? How long do you plan to pay for it? Can I manage with the amount that will be left from my paycheck after paying the monthly due? These are a few questions you might want to consider before taking any personal loan.

4. Are there any expenses that I can cut off?
This is probably the longest list that you need to clear up. Eliminate or at least reduce the non-value adding expenses. If you can live without it then sacrifice for a few months until your loan is settled.

5. Can I pay a little more than the monthly due?
If you can afford it, pay more than the monthly due. This is more important for loans that are compounded monthly to minimize the amount of interest that you have to pay for on the next payment period.

These are few of the things I personally consider before taking a loan. What are yours I'd love to read your advice?

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