Tips for young adults to manage personal loans

In the early 20’s, many young adults enter the challenging working world with the intention of chasing the life of their dreams. While some seek for a luxurious lifestyle with car, house and entertainment, others might be more practical with the dream of settling down in a simple cozy house with their lifelong partner. Ultimately, regardless of the lifestyle choice made, the solution to fulfilling these dreams boils down to money.

When young adults first join the workforce in their respective fields, they will be leaping with joy upon receiving their first month salary. Consequently, many things can be done with their first ever paycheck, for instance, splurging on clothes, buying the latest technology gadget, fine dining with friends and family, etc. At the end of the day, how much money could they save each month if most of the money earned only manages to cover the cost of living.

In the worst case scenario, the salary gained is not even enough to sustain their basic necessities such as paying rents and bills. Therefore, many opt for the extra little help by applying for personal loans as it is indeed the fastest and easiest route to get hold of a lump sum of cash. The word highlighted here is definitely cash! Who is not excited to spend the extra money on the things they have always wanted. Nevertheless, borrowers must keep in mind that these extra cash are borrowed and has to be paid back during the loan tenure, plus they are charged with interest monthly. Being said so, it is always true that nothing comes free in life.

So, here are some tips to manage the personal loans to avoid being trapped in spiraling debts. Right from the start, you should only borrow based on what you can afford with your current income. Do not borrow based on your expected future income since you don’t know how things will turn out to be. Before securing a personal loan from any bank, there are several things to consider such as the interest rate, eligibility criteria, early repayment fees and late repayment fees.
Also, practice the habit of paying the monthly repayment fees on time. Should you fail to do that, there is a late payment fee charged. Hence, you have to pay more than the initial amount and as more fees accumulate, your debt is also increasing. One way to ensure that you have spare cash to make the monthly payment is by setting aside some money from the salary each month.

Next, it is essential to budget your spendings according to priorities. If you decide on using the loan in buying the latest handset just because the mobile phone you bought six months ago is no longer in trend, you are surely not managing your loan wisely. Always lay out the expenses used in a month clearly. And, by doing so, you can keep in check the flow of money as well as ensuring that you do not spend beyond your means.

Last but not least, it is of utmost importance to choose the right bank that offers you the personal loan that best suits your situation. More likely than not, comparing the interest rate by each bank has been the most sought-after approach to decide on the ultimate bank. To compare which bank has the lowest personal loan rate at your fingertips, use iMoney’s personal loan calculator and rate comparison tool. Besides, you can check out the Alliance bank and Al Rajhi bank for their respective rates.

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