Borrowing money is an important financial move that can do more harm than good if not done right. There are financial consequences that can wreak more havoc on your credit score if you don’t plan well. Before you take out a loan and any type of loan for that matter, there are things to keep in mind. Below are some things you can start with:
Borrow only what you need
When you borrow money, it is sometimes tempting to borrow more especially when you’re eligible to do so. But that can be a mistake you don’t want to commit. A wiser move you should rather do is to keep the borrowing within your needs. Then it will be easier to repay the loan as planned.
Make sure you can afford the monthly repayments
Another key thing to remember is to make sure you can handle the monthly repayments. This is why borrowing beyond your means is a big no-no for responsible borrowers. You don’t want to put yourself in a hotspot. If you can’t afford the repayments, chances are high you’ll end up in even bigger trouble in the end with hefty penalties and skyrocketing interest rates.
Shop around and compare deals
Don’t sign up for the first cheap deal you find. In order to find the best deal available, take your time by shopping around from different providers and lending firms. Then compare similar deals. Look at their representative APRs and base your decision on the potential cost of the loan. Obviously, you should go for the deal with the cheapest interest rate available. Only then will you be able to insure that you’re getting the best end of the deal.
Find out more about hidden fees, penalties and other charges
Don’t stop with comparing APRs when choosing your loan deal. Go the extra mile by allotting some time to find out more about hidden fees. Lenders can be tricky and before you knew it, your loan’s cost may have already spiked up because of hidden fees. To avoid that from happening, do the proactive approach by calling your lender and ask about hidden fees, early repayment fees and other related charges. Your goal is to know all the details so you won’t get the shock of a lifetime once the repaying starts.