Financial issues plague a lot of people, no matter how responsible they are with money. You don’t have to be unemployed to struggle to make ends meet. In fact, many people are working two jobs and still struggling to pay their bills, as costs increase but wages stay low.

Furthermore, there are inevitably unexpected costs that come up throughout the year, whether for medical expenses, unexpected events like weddings and funerals, or an urgent trip to family across the country.

If you’re struggling to make ends meet, you might be considering a personal loan with monthly installments. This is certainly not the last resort. On the contrary, the best installment loans come with reasonable rates and can open up possibilities for you.

However, you do need to ensure you consider all the variables. Ask yourself the following five questions when considering a personal installment loan.

1. What is the true cost of the loan?

When taking out an installment loan, it’s tempting to think about it in terms of the monthly payments. Can I afford to pay it back every month? If so, I should go for it, right? Well, not quite.

It’s important that you fully understand what the loan will cost you. This includes any fees associated with the loan, as well as the interest you can expect to pay. It’s not always easy to work this out yourself but fortunately, there are some very handy loan calculators online.

Once you have the true cost of the loan at hand, you need to decide whether it’s worth it. If it seems excessive, ask yourself whether there are better ways to meet your expenses.

2. How will your credit score affect it?

Contrary to popular belief, there are personal loans on offer no matter how bad your credit or FICO score (your FICO score is a particular credit rating system that determines how high a risk you are as a borrower). Some loan companies won’t require you to disclose your credit score. However, a credit score is relevant for more than just determining whether a loan company will accept you.

Rather, lenders decide how much interest they’re going to charge based on your credit score. They’ll vary the amount they’re willing to give you based on your score and they may impose stricter conditions if your score is low.

If you have a bad credit record, you’re almost certainly going to get hit with high-interest rates. Check your credit score and read the small print from each company about how it will impact your loan before committing.

Installment loans can actually help you build a credit score if you are starting out or if you need to make up for past missteps. If the true cost isn’t too high, this may be a great strategy.

3. Is early repayment an option?

It’s not uncommon for people to take out a loan to meet immediate needs. You may know that you’ll be able to pay it back in a month or two. However, payday loans and other short-term loans can be costly. So, a longer-term installment loan seems like the best option. You expect to pay it all back far sooner than the terms agreed.

Unfortunately, it’s not that simple. Lenders make money from long term loans because of the cumulative costs. They don’t necessarily allow you to pay back the loan early, or they may impose early repayment charges.

Find out if early repayment is an option and won’t cost you too much. Otherwise, consider shorter-term loans.

4. Will a bigger loan save you money?

Counterintuitively, a bigger loan doesn’t necessarily mean a more expensive loan. A bigger loan opens up far more possibilities for you. While a small loan will help you pay your bills, a big loan can give you options to make money, either by investing or by giving you the breathing room to make bolder financial choices.

Of course, the number you get for the true cost of the loan will be a major factor here. Even if a big loan opens up options, a high cost may negate the benefits.

5. Do I need to consolidate?

If you’ve opened a number of personal loans already, you should reconsider whether another loan is really the solution. It might give you short-term relief but leave you struggling for the foreseeable future. It’s best to find out whether consolidation is possible.

Consolidation takes all your loans and consolidates them into one loan. This can be done at no cost to you, making it easier to pay back everything without a huge cumulative interest rate.

Personal installment loans can create opportunities, but if you rely on them too often, you can dig yourself into a hole. Consider consolidation before opening up a new loan. If it’s not an option, try to find alternatives.