Want to take a credit loan? Consider this so that you don't make a mistake

Financial problems and future cost requirements can never be accurately estimated.

You may have prepared an emergency fund and savings properly, but the funding needs are still not being met properly.

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When this happens, applying for a loan or credit is one solution that can be done.

However, don't take the wrong step when taking a loan so you don't get caught in a problem that gets more complicated in the future.

Here are some things to consider before you apply for a loan.

Whether it's credit loans, bank loans, cooperative loans , online loans and others.

The reason you need the loan

These are the considerations before taking the first credit loan.

Taking a loan is a financial decision that will be very helpful or can even worsen your financial condition.

The loan you take can help your financial condition, when you are able to manage it properly and correctly.

Thus, you must know in advance what the reason for taking a loan is.

For example, you will take a credit loan to finance a home loan.

So that the credit paid every month feels lighter, you can pay a larger down payment.

Loans of this type are included in good credit, because you will get an asset in the form of a house in the future whose value will continue to increase.

However, there are also borrowers who take out credit to cover emergencies such as paying medical bills, financing car accident repairs, and other circumstances.

Actually, this type of loan can be prevented by starting to prepare an emergency fund whose value is at least 6 times the monthly expenses.

If you do not have an emergency fund to meet urgent needs as above, taking a loan can be a temporary solution to overcome the financial problems you are facing.

Know For Sure What Your Needs Are?

When making a loan, the lender will usually ask where the money will be used.

Well, in this case, if you want to use it to provide an injection of business capital, it is not uncommon for lenders to search for the business, as well as how the financial situation is.

Here, you should master and understand what their needs are by providing clear and detailed information so that the lender has no doubts.

Also Know the Amount of Funds Needed

You must be able to adjust the amount of credit to your actual needs.

It's best if you don't apply for a loan that exceeds your needs because it will burden your monthly expenses.

The greater the credit number, the greater the amount of installments you have to pay each month.

Then how to calculate the required loan?

1. Define Business Goals

is it just to build a boutique shop or to create a new product?

Be as detailed as possible when presenting your goals.

This will help you focus on what you really need to buy/invest in to achieve that goal.

2. Determine the Plan Timeline 

A financial plan alone is not enough, you must include it with a timeline plan.

Make a best plan to estimate the deadlines of the sub-goals you need to achieve on the way to the main goal.

You can think of this as a tactic to achieve a long-term strategy.

Planning a grace period will also allow you to better calculate your capital requirements.

This will encourage you to look at periods where you can spend extra money.

Pay attention to periods of time when you have to spend more capital, for example to create a new product.

After that, budget more accordingly.

3. Calculate Your Financial Needs

After setting goals and a timeline, it's time for you to calculate your financial needs.

You can list everything you need to achieve your business vision.

There are three different categories of capital: fixed capital, working capital, and human capital.

Fixed capital: consists of durable manufactured goods, usually used during the operational life, such as crops, tractors and factories.

Usually, fixed capital has a high price and is not liquid, but it will be needed to support business operations.

Working capital: consists of disposable producer goods, such as raw materials, work in process, and fuel.

Anything used in one act of production is considered working capital.

Therefore, based on its characteristics, working capital can be more difficult to manage.

So prepare well when calculating how much capital is needed.

Human capital: can be easily defined as the people who work for the company including their respective skills, educational background, health and others.

Like fixed capital and working capital, expenditures on human capital need to be as detailed as possible.

Salary costs, budget for extra human resources, etc., record them all and make a cost range.

Planning how much funds are needed may indeed take time, but this will really help you have more mature preparation from time to time in running a business.

Once you get the required capital loan, you can re-evaluate the existing calculations to stay on the right track.

Pay attention to the ability to pay loans

If you have determined and know the reason why you take a loan, then the next step is to think about your ability to pay your obligations later.

Never take out a loan that you can't repay yourself.

Strongly recommend not to have debt more than 30% of monthly income.

That way, if you have an income of IDR 3 million per month, then don't take debt installments that are more than IDR 1 million every month.

Customers who want to apply for credit to advance their business should have calculated the amount of installments they can afford each month.

Adjust the loan amount according to your needs and abilities.

This also applies if you make a loan from an individual institution, either directly or online.

This is important so that later there will be no late payments that can result in credit records.

It's possible, you know, the lender imposes a fine and demands you to pay off the loan you have to legal channels.