Installment loans are an excellent way to get your life back on track. They can be very helpful when managed well. You can use them to pay off your bills, as a downpayment for a vehicle, or to face an emergency.
New lending companies are popping up everywhere as well. It’s getting more and more convenient to get an installment loan, even in the comfort of your own home.
Still, money is always a serious matter. Installment loans, no matter the amount, can be disastrous when mismanaged. But don’t worry. Here’s how you can make the most out of your installment loan and make it work for you.
Only Borrow What You Can Afford
You will have to pay back an installment loan within a given time frame, so only borrow what you know you can payback. As much as you can, do not take out a loan without planning where your payment will come from.
This practice ensures that you don’t end up in a precarious financial situation. Installment loans, when left unpaid, can accumulate into debt. This situation has the potential to plunge you into a debt spiral and damage your credit score.
When you plan your loans according to your income and capability, you feel more secure. You can keep track of your money, and your loan can help you, not stress you out further.
Keep an Eye on Your Spending
Once you get the money from your loan, make a budget. This is the best way to make sure you use it for its actual purpose. Keeping track of your expenses alerts you of any unnecessary costs.
It is best to make your budget before you start spending, so you already know where each cent will go. You also have no room to make needless expenses.
If you need a little help, you can do the envelope method. First, you divide your money into different envelopes with designated categories. For example, you have one envelope for bills, another for food, and so on. This sets limits and gives visual cues on how much you have spent.
If the envelope method sounds a bit much, you could use tons of online budgeting resources. You can also find helpful budgeting apps for your phone or device. A simple notebook would do as well.
Pay on Time
Paying on time is the best way to stay on top of your installment loan and avoid any late penalties. You’re also paying for interest every month, so this is the best way to keep your payments as low as possible.
The best way to do this is to set aside an amount from your monthly budget for your loan payment. This way, you don’t end up with insufficient funds before you even make your payments.
You can even set up an automated payment system with your bank account. This frees up some headspace, knowing that each month, you can make your payments.
Choose the Right Lender
Choosing a lender is one of the most essential decisions you can make before taking out a loan. Take your time and weigh your options when choosing a lender with care.
Of course, you should choose one with low-interest rates. You should also vet the reliability and transparency of the lending company.
Make sure to do your research and read the fine print of each company. Do this to ensure you aren’t ambushed by undisclosed or surprise fees once you take out the loan.
GoDay discloses all their fees upfront so that you can repay your loan in fixed payments. No hidden fees, no surprise penalties. It’s one of Canada’s most convenient and reliable lenders today.