How Much Should I Borrow?
Choosing how much to borrow when you take out a loan, is actually a much more difficult decision than you might imagine. You may have a sum in mind, but borrowing too much or too little could have bad results for you.
Borrowing more money than you need might seem like a good safety net. You may feel that it would nice to have a bit extra, just in case you need it and to just have some security. However, you need to consider the cost of the loan. Borrowing extra money will mean that you will be charged more interest. It may take you longer to pay it back and that will mean that you will end up having the burden of the loan for longer and paying more for it. This is not good. If you want to know how much you have pay for your loan, you can try these loan repayment calculators.
However, if you do not borrow enough money, then you could end up needing more money and not having it available to you. You may have another bill that you have to pay or something like that and you will not have enough money to pay for it. It can be difficult to organise another loan, when you already have one and so you may not be able to get the money.
You will therefore need to give some very careful thought about the amount of money that you need to borrow. Consider how long it is until you next expect to get some money and therefore how likely it is that you will need to borrow more soon. Consider the likelihood that you will need more money soon as well. Also consider whether there might be other borrowing options for you, if you need to get extra money in the future.
It is best, from a financial point of view, to borrow as little as possible. This will mean that you will end up spending the least amount of money. However, if you get stressed by not having money available to spend, then it could be better from that point of view to get a bit of extra money and bear the extra expense.
It can be hard to think clearly in situations like this and know what the best thing is to do. You may be panicking, needing the money quickly and not able to think straight. You may not have had a loan before and be worried about the implications of that. You may have other debts and worried about gaining another one.
It can be good to discuss it with someone. There are debt advisors that you can talk to, but you may prefer to speak to your family and friends. Try to find someone who has had experience of it or knows about finance so that you can get the best possible help from the most qualified people. Take your time thinking about your decision and considering the amount that you need to borrow. You may have one specific amount that you need, but it may be that you just need more money or feel that you could do with some extra to what you need for an outstanding bill.