The modern employee now has tons of benefits given by companies and organizations. One of these benefits is a salary loan. For many employees, the salary loan is a ‘big break’ that can raise spending power, settle other debts, and basically give a rewarding experience.
Before getting a salary loan, you need to be wary of the following factors:
Typical borrowers rush in for the money without thinking about the moneylender’s reputation. This is because of powerful marketing tactics which can be seen from all aspects of society (i.e. TV, print ads, banners). With hundreds of lenders competing for the borrower pie, it may be difficult to find the reliable one. Therefore, you should create a checklist of your preferences, combined with any information that you’ve gathered. Once you’re 100% confident with the lender’s reputation, you can now proceed with the loan application.
Interest Rate and Terms
In every loan, you should always observe interest rate and terms. These are the main parameters that will determine if the loan is worth your time or not. Some loans may have higher interest rates, while others have lower. Terms can also be longer, but you can always choose a repayment term that matches your monthly budget. Keep in mind that longer repayment term doesn’t necessarily mean comfortable payment. If you stretch out the payment for too long, the moneylender will gain the advantage. As a rule of thumb, you should only pick a term which has a range of 3-5 months.
Your Financial Plan
Creating a financial plan is a beneficial habit that everyone should do. Aside from helping you to repay your salary loan accordingly, your financial plan will serve as a ‘bird’s eye view’ of your finances. You’ll see your strong and weak points. More importantly, you can adjust your strategies easily – there are no second guesses. At first, keeping tabs on your financial plan may be a real challenge. As you go on continuously, you’ll get the hang of it!
A salary loan is meant to be a financial solution or a trump card that will get you out of an emergency. It’s not a crutch that you can always count on. If you’re a slave of salary loans, you should rethink about the direction of your life. Another useful strategy is to use your salary loan for a long-term investment that will see you through for the coming years. Borrow wisely – you won’t regret it!