3 Questions to Help You Decide How Much to Borrow When Taking Out a Personal Loan

If you are getting a personal loan, the first and most significant decision you will have to make is how much you want to borrow.

Borrowers can choose from a variety of lenders with varying loan minimums and maximums, so you could be able to get a loan for as little as a few hundred thousand naira?or as much as a million?naira or more.

So, how do you figure out how much money to ask your lender for? Here are three questions to consider before making this critical decision.

What's the minimum you need to accomplish your objectives?

The most significant consideration in calculating how much to borrow is obviously how much you require. You don't want to overextend yourself and end yourself with greater monthly payments and higher interest expenses for no reason. You also don't want to end up with too little money to be able to repay the loan.

It's not always straightforward to figure out how much to borrow. If you're trying to use your personal loan to repay debt, for example, you could add up the balances of your outstanding loans you want to consolidate and refinance. This will offer you the entire amount you should ask your lender for.

It can be more challenging in other situations. Let's say you're conducting some home repairs and you don't know how much the overall cost will be. In these cases, you'll have to make an educated judgment and may wish to err on the side of caution. You can always pay back whatever extra money you have but receiving another loan for more money may be more difficult in the future.

If you don't know how much you need to borrow upfront, you could also investigate other options, such as applying for a line of credit from which you can draw.

How much can you afford to pay back?

When deciding how much to borrow, keep in mind the impact of your loan on your current financial condition.

If you determine that you require a 5 million Naira loan, but the monthly payments on such a large loan would be difficult to manage or would interfere with other financial goals, you may want to consider a smaller loan amount.

Before deciding on the correct amount to borrow from a lender, thoroughly consider your budget and how your loan payments would fit into it. If you discover that you can't afford to borrow as much as you'd anticipated, you may need to lower your expectations or postpone taking a loan until you've saved more money to help your goals.

How much total interest will you pay overtime?

Finally, consider the broad picture to ensure that you're comfortable with interest costs over time. Otherwise, you risk choosing a loan with a long payback duration only because it has low monthly payments, only to end up spending a lot of money in interest throughout the life of the loan.

By answering these three questions, you can ensure that the funding you obtain is appropriate for you and that taking out your loan is, in the long run, the best option.

We at Creditville, offer loans to suit your personal and business needs. Simply call 07000330330 or send a WhatsApp message to 08055100010 with your inquiries and we will be happy to help you.