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Finance
Mortgages, pensions, loans, shares, savings |
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Loans - Do You Really Need One?
Loans
Do you really need a loan?
We all need extra money at some point in our lives. The first idea that springs to mind is taking out a loan. But before you look around for the best deals, it’s a good idea ask yourself the following two questions:
1. What is the loan for?
2. What alternatives are there available?
What is the loan for?
This may seem like a basic question, but it’s best to know why you need the money (new car, new kitchen or your business?) This will help you to decide whether taking out a loan is really is the best option. It can be all too tempting to borrow more money than you actually need.
Once you know what the loan’s for, you should then set yourself a budget. Work out what repayments you can afford over a set period of time, not forgetting to include interest! (E.g. £100 per month over 3 years.)
If the loan is for your business, you will need to prepare a business plan. This document will allow potential lenders to understand how you will use the money. You may need to ask an Accountant for advice.
Alternatives to a loan
Taking out a loan can be risky, so it’s always worth considering other alternatives. For instance could you ask your relatives to loan you the money? Could you dip into your savings? Could you make certain cut-backs? You may find that you can manage without the need for extra money.
If you really do need a loan, make sure that you look into all your options before committing yourself.
Motley Fool- Is a loan the right choice?
www.fool.co.uk/loans/information/is-a-loan-the-right-choice.aspx
Financial help for small businesses
www.smallbusiness.co.uk/5.3.20/small-business-finance/raising-money/
Business Link Berkshire and Wiltshire- Business Plans
www.blbw.co.uk/
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