Why Personal Loans Can Be A Smart Financing Source

The beginning of 2021 has been surrounded by different ramifications caused by COVID-19 and one of the most worrisome is the economic situation, which has hit thousands of families since the first quarter of 2020. Although there are various initiatives to improve this situation, the pandemic continues to play against us.

We must not forget about entrepreneurs or micro, small and medium entrepreneurs, who, without a doubt, have carried out an unattainable search to obtain sources of financing. Among the main reasons to capitalize is to keep your business afloat and not be forced to close due to low traffic or – in the worst case scenario – the absence of customers.

Focusing on this last problem, it is important to highlight that there are immediate loan alternatives, which can be accessed to have working capital and face daily expenses, such as completing the payment of a payroll or paying off a debt that was contracted in the last.

In Mexico there are various financing modalities and they range from credit or departmental cards, to specific credits, payroll, acquisition of durable consumer goods, mortgages, among many others. However, many times personal loans are seen as a bad option, when the truth is that, well used, they are also an intelligent source of financing.

But why? Good, because first of all they are characterized by being open loans that are not associated with a specific purpose. This means that, when requesting it, you do not have to render any account of its purpose. For example, a part of this loan could be available to carry out a remodeling in the business, to provide it with raw materials, to acquire machinery or for personal use such as taking a trip or opening an investment account.

On the other hand, it differs from other types of loans due to the guarantee that the credit institution has in case of non-compliance with payments. Whoever hires a personal loan offers their present and future assets as collateral, unlike a mortgage loan where a real estate is at stake, which will cease to be theirs in the event of non-payment. For this type to function its mission, it is necessary to consider only one golden rule that consists of: that the duration of the loan is not longer than the life of what is being financed.

Finally, for practical purposes of this financing mechanism, I always suggest taking into consideration the following basic guide:

1.- Be completely sure that the financial institution is a legally constituted and serious company; in this way we will not suffer any type of fraud or misuse of our personal data.

2.- Compare between several institutions and select the one that best suits our possibilities. Remembering that there is traditional banking and Popular Financial Societies, which offer a much more accessible range of products.

3.- Review the conditions of the contract before signing it. As with credit, bank and departmental cards; You must consult, compare and review the CAT, commissions, as well as all the terms and conditions.

4.- Verify the support of regulatory entities such as CONDUSEF, UIF, etc.

5.- Prepare your budget and verify your payment capacity, in this way you will not damage your reputation with the credit bureau.

6.- Always consider the interest rate, the opening and cancellation fees (total or partial) and the payment term.

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