When is the last time you considered a personal loan? This is a question that will have varied answers. Some people might say that they need cash now to purchase a diamond ring for his loved one, and then other people will answer that extra money is required to arrange for a small get together party to celebrate a marriage anniversary. There are many varying occasions where an individual is show how obligated to spend money. Many times, these concern money that he does not have. Banks and lenders recognize this and have created products that cater to these people with “special” occasions.
No matter what is the reason, before you decide to go for your first personal loan of your life you need to possibly go through a session with yourself wherein you need to get rid of some psychological barriers to finally make up your mind to go for the personal loan. The biggest barrier to taking that step to borrow money is that most of us are brought up with the mentality that borrowing money is bad. And because of this struggle with our own self-image, we try to avoid borrowing as much as possible. What kind of psychological barriers would normally stop you initially?
Am I not capable enough?
An age old psychology works in human mind that once we borrow something from someone that would mean that we are not capable enough of arranging for that thing on ourselves. This pulls the self morale of the individual down. What needs to be understood here is that conditions are never the same for anybody all throughout his or her life. If you are facing a financial crunch due to which you are not able to manage the expenses, it does not mean that you are incapable. You need to understand that this is possibly a rough patch which will go away very soon and if you do not find other sources of legitimate cash, you may fall deeper into the pit going further.
Life is never smooth sailing like we a led to believe in movies or television shows on prime time. Even the most successful person will have gone through a tough period where he has to think twice about what to order for lunch. And it is because of this fantasy that most people feel embarrassed or even shameful that they have to take up a personal loan and subject themselves to the scrutiny of the banks.
Your cash-tight circumstances are not unique. Even millionaires need to take up a mortgage to buy a house. In fact, financially savvy professionals make it a habit to borrow to the hilt so as to gain more leverage. So do not think any lesser for yourself just because you are making an appointment with the loan officer at the neighborhood bank tomorrow. It’s just part and parcel of life’s ups and downs.
What if I am not able to repay the loan?
Most personal loans come with a flexible repayment tenure which varies from one year to five years mostly. Depending on the overall tenure, the monthly installment that needs to be paid will be determined. You need to gauge your earning levels and prepare a monthly budget to understand how much you would be able to spare in the future as a monthly installment and accordingly decide on the tenure of the loan. If you do it this way, there is no possible way that you will turn out to be defaulter.
An analyst employed by the lender will plug your numbers into their own calculators programmed with their internal formulas and equations. A maximum quantum will then be generated. It will then be up to you to decide whether to take up the maximum amount or at a quantum lower than the maximum. As lenders make their profits from charging interest on borrowed funds, they will always be tempted to lend you as much as your qualify for from their systems.
But since you are the one who will be paying for it, you have to decide for yourself how much will be a comfortable level for you to repay without letting it affect your lifestyle. If the monthly repayment comes up to 50% of your salary, it is not difficult to realize that that is too high a ratio for comfort. A debt to income ratio of between 10% to 25% is a number that will be acceptable to most adults.
What will people think of me?
This is one psychological barrier that almost all people face while deciding for a personal loan. What they do not realize is that when no one is going to help you out with the required money at the time of your need, you should be the least bothered about who is thinking about what of you. Who cares! This needs to be etched on stone in your mind that if they are not helping you they do not exist for you, and you should not be bothered for what is being said or thought by people who do not exist at all. This is just a mental approach to use. Don’t take this literally and exile your friends from your social circle.
Humans are social and there is always a deep need to be socially accepted by our social groups. But remember that your friends should hang out with you for who you are. Not for the financial strength you display in your bank account. And usually they do not even bat an eye lid when they realize that you are in financial turmoil. It is only when you demand that they are obligated to help you out financially will people start to avoid you for your radical ideals in life. Avoid pestering your friends for money. Ask them once if you have to. If the answer is no, move on and never bring up the matter again. Nobody has the right to judge you and you shouldn’t let this get to your head.
Breaking psychological barriers may not sound as easy as it seems to be, however one should have full faith in his own self and the self confidence is what will be driving force behind breaking the psychological barriers before taking the first personal loan. The good thing is that once you get past this the first time, the barriers are broken and you will not encounter them again in your head on following borrowings.