4 top tips for managing a personal loan17th June 2016
4 top tips to manage a personal loan
It’s a great feeling when you receive formal approval for a personal loan, or any type of credit for that matter!
But once that excitement has passed, the next step is to make sure you understand what is expected of you and manage your personal loan within the terms and conditions you agreed to.
Regardless of whether you have taken out a bad credit loan, bond loan, car loan or holiday loan, the key is you are now responsible for repaying a personal loan on time, and preferably every time. Here are our 4 top tips to help ensure you manage your personal loan with great success!
1. Set up a direct debit AND a reminder!
Most lenders encourage you to set up a direct debit facility so your personal loan repayments are automatically deducted as soon as your pay has been deposited. This is certainly a great idea, but you must be 100% certain there will definitely be enough money in your account for the direct debit to happen.
In the event you don’t have enough money, your direct debit will be dishonoured, meaning you will probably be hit with fees from both your bank and the lender. Make sure you utilise all of the fantastic modern technology available and set a reminder to check your account balance each time the direct debit is due.
There are hundreds of app’s available for phones, iPads, computers etc so find one you like and avoid missing a personal loan repayment. If you don’t have enough money, contact your lender straight away and see if you can adjust your payment date or resolve in another way.
2. Always be one payment ahead
When you receive your loan, the first thing you should do is make a payment straight away. It doesn’t matter that your first personal loan repayment isn’t actually due. By always being one payment ahead will cover you in the unfortunate event a payment or direct debit doesn’t occur.
We all know mistakes happen, so protect yourself by always being one payment ahead, which will prevent you from falling into arrears and potentially having your credit rating affected.
3. Make your direct debit slightly more than required OR do ad hoc extra payments
This is another way you can protect your personal loan and credit file. Why not make your direct debit $5 or more than is required. This will also repay your loan more quickly and reduce the total amount of interest you pay over the life of the loan.
If you aren’t prepared to set a higher direct debit, the other alternative is to make an additional deposit whenever you have a little extra money. Try and resist the urge to spend it and instead ask your lender if you can transfer an additional amount to your personal loan.
Here at Fair Go Finance we welcome our customers to make additional payments and pay out their loan earlier than expected. It will benefit you, both in cost and improving your credit score.
But one word of advice, If you are with another personal loan lender make sure you check what their policy is on extra repayments. There are some lenders who may charge an early repayment fee which will unfortunately negate the potential benefit of you paying extra.
4. Keep your lender up-to-date with your details
Its essential that you always keep your lender informed of your current contact details. If you move house, change jobs, change e-mail address or contact phone numbers its imperative you notify your lender.
This is because if one of your payments doesn’t work, for whatever reason, they can contact you immediately and you can rectify it and hopefully avoid any penalties.
If the lender cannot contact you, they will need to put your personal loan under review, generally in a collections departments, which you should want to avoid at all costs. By purposely avoiding repaying your loan could mean you ultimately are referred to an external agent who will use many methods to locate you and continue the debt recovery process.
Ultimately you could end up with a credit default on your credit report, which will remain for up to 5 years and will seriously impact your ability to obtain future finance.
On a much brighter note, lenders like ourselves often run fantastic competitions so by having all your contact details up to date will ensure you won’t miss any opportunity! At Fair Go Finance we recently had a competition where one of our customers won a brand new car! Not a bad result for simply taking out a cash loan with us and having up-to-date contact details!
So there are our top 4 tips to manage your personal loan. Make sure when you take out a personal loan you keep on top of your repayments at all times. We understand there are times when you may not be able to make a payment and here at Fair Go Finance we are always ready to listen and work out a solution.
We hope you adopt these 4 top tips and who knows, you could even end up driving off in a new Ford Fiesta! Oh, and if you are actually in need of a personal loan, why not apply now! We’re here to help!