Applying for a Personal Loan

Before applying for a personal loan, ask yourself first:

  1. What are you borrowing the money for?
  2. What is your current financial situation?
  3. Are you in any capacity of paying the loan back?

Make sure you are never borrowing money for a personal loan based on an emotional decision.

Only after you look at your needs, financial situation and repayment plan should you consider moving forward with securing a loan.

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Advantages of Personal Loans
  • Personal loans are flexible forms of credit where they can help you reach various financial goals.
  • They allow the borrower to use it in every situation imaginable like emergency expenses or debts that you might have.
  • Personal loans can also be used to consolidate debt if you have many, into one loan and make debt less confusing.
  • It is one of the most popular borrowing tools on the market because it does not require collateral.

As good as it sounds, personal loans have its own disadvantages such as:

  • Some personal loans have higher interest rates because since it doesn't require collateral and are unsecured, the risk of not paying the lender back is high; and
  • It can affect your credit score, either short-term or long-term negative effects. By adding debt to your financial profile, personal loans can and is going to affect your credit score.

Deepstash helps you become inspired, wiser and productive, through bite-sized ideas from the best articles, books and videos out there.



  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accounts and negotiate credit debts based on interest rates.
  3. Track Your Net Worth: The difference between your assets and debt — it tells you your financial standing. 

50 Personal Finance Tips That Will Change the Way You Think About Money

The credit score

It is a three-digit number that lenders use to assess your creditworthiness and your ability to pay your bills on time.

  • The score ranges between 300 and 850.
  • The higher the score, the more creditworthy you are, and the more likely lenders will lend you money at a lower interest rate.
  • The FICO score is the most widely used, but there are also other systems.
  • Your history of payments determines your score as well as your credit utilisation.
  • Your credit report determines your credit score.

What Is a Credit Score?

The snowball debt method

With this method, you pay off your debts from the smallest balance to the largest balance, regardless of interest rates.

When you pay the smallest debts first, you start to clear your low debts away very quickly. Doing this feels empowering. Once you've paid off a debt, you will have more money to send as an additional payment to the next debt you are focused on (hence the snowball analogy.)

Snowball vs Avalanche: What's the best way to pay off debt?

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