Taking out a home credit loan (or any loan, for that matter) is a big deal and an extra financial responsibility, so it’s a decision you need to consider carefully. Is this your best loan option? How do other unsecured loans measure up? Read up on home credit loans vs unsecured loans to help make up your mind. There is a myriad of things you need to take into account when taking out a loan, so here are the top things to consider.
How Much Do I Need To Borrow With A Home Credit Loan?
Obviously, the first thing you need to take into consideration is how much you are actually looking to borrow. It is advisable to sit down and calculate exactly how much would cover your expenses and only borrow that amount.
It can be extremely tempting to take more money than you actually need, because why not? That’s because you’re not thinking about your repayment instalments. The more money you borrow, the higher your instalments will be.
You also need to know that a home credit cash loan is good for relatively small amounts, as you won’t be able to cover a large expense. You can generally get somewhere between £100 and £1000, with most companies offering a maximum loan of about £500.
Take into account the fact that you will have a high-interest rate, as this is an unsecured loan. In addition, the longer you take to repay the loan, the higher the interest will be. Think about whether or not you are willing to pay this significantly larger amount of money.
For some people, the fact that they can pay in smaller instalments will make paying the higher amount worth it, but other people will be put off by the difference.
How Long Will It Take To Repay The Home Credit Loan?
The next thing you need to think about is how long it will take you to repay the full amount back. When you borrow money through a loan like this, you commit to making multiple payments over a longer period of time that can be several weeks or months. That is how long you’ll be on the hook for this money, legally.
What you need to consider is:
The continued responsibility
A signed document for an 18-month loan, for example, is a certificate of responsibility for you. You commit to paying this back every single month, for the next year and a half. You need to always keep it in mind, put money aside, worry about payments, make sure to be home when the home credit loan agent comes by to collect the cash, etc.
The risk factor
Anything can happen in that amount of time, including financial ruin, an unexpected tragedy, a move abroad, etc. What happens if you take on this financial commitment, and then you find yourself unable to pay? Are you prepared for the worst case scenario? Hoping it will be fine won’t get you by, you need a back-up plan.
The money you pay regularly
Taking this loan means making sure that you pay regularly. This means that every month, you have to put money towards this loan. Are you willing to do that? Is that feasible for you? Are you responsible enough for that?
Can I Afford The Monthly Repayment Instalments For A Home Credit Loan?
Then, there is the problem of affordability. It seems deceivingly simple, at first – the amount you pay back every month is so much smaller than the total one you’re borrowing, so you think you’ll have no problems paying every month. But that impression is far from being enough.
You need to seriously assess your financial situation and see if you can afford to be without this money every single month for however long it takes for you to pay off this loan. Do you have an income? Where are you getting the money? Do you know for sure you will have a source until the end of the repayment period? Take a look at our guide on obtaining a home credit loan with bad credit
Are There Any Other Better Options Than A Home Credit Loan?
Depending on your needs, preferences, and financial situation, there might be better or more suitable loan options for you out there. You need to assess your financial situation and see whether you could get accepted for a different kind of loan that would maybe offer more advantages than a one from a home credit loan company.
Credit cards
If you don’t need a large amount of money, you might consider getting a credit card, instead. Putting purchases on a credit card is like getting an advance every month that you need to pay during your next billing cycle. Keep in mind there is a credit limit and that if you fail to pay off your balance, you might go into debt.
Payday loans
Payday loans are loans you get until your next pay check, and they can be a life saver if you need money urgently. However, remember this is not a long-term solution and that you need to pay the full amount when your next pay check comes in. This can turn into a vicious circle.
Small guarantor loans
A small guarantor loan might seem ideal, especially if you’re struggling with bad credit. The problem with this is that you need someone to sign for you as your guarantor and that the amount you can get is quite small. Perhaps a home credit loan for bad credit might be a better solution.
In conclusion, before you make a big decision, you should always look at the problem from all sides. Every loan option will have advantages and disadvantages, and home credit loans aren’t any different. Consider all your options before you make a decision and make sure that you are covered from all points of view.
| Top things to consider when taking out a home credit loan | |
|---|---|
| How much money you need | Think about how much money you need to get. With this loan, you can typically get between £100 and £500, so if you need much more, you might need to reconsider. |
| How long it will take to repay | A loan like this is repaid over a long period of time, so you need to think about whether you’re willing to be on the hook or that long. |
| Whether you can afford to repay | Can you afford to pay every month? This is a long and expensive responsibility, and you need to be prepared, long-term. |
| Whether there are better options | Are there similar or better options on the market? Always look at alternatives before deciding on a loan. |