Saturday, November 12, 2016, AM | 3 Comments
Taking out your first loan signifies a new level of responsibility. It can be exciting, particularly if you are intending to use the cash for something really interesting, say to fund a house or business.
Not being cautious, however, can lead to toxic amounts of debt that can financially debilitate you for years to come.
Here’s four tips to remember when taking out your first loan.
Check The Fine Print
Before applying for a loan, review the fine print to check that all terms and conditions being applied were the originally agreed upon terms and conditions. The more it sounds too good to be true, the closer you should look at the contract.
There are some loans out there that have a favorable interest rate but are coupled with onerous conditions. An unnamed bank, for instance, may offer a loan rate of 5.6 percent, which if you’ve done some rate shopping online you’d know that’s a decent rate for first-time borrowers.
However, to be eligible, the bank requires applicants to have a specific card, which needs to have been used for at least six months.
PPI stands for payment protection insurance and is designed to pay off your monthly credit card payments in the event that you lose your source of income due to layoffs or extended sick leaves.
If you purchase PPI, make sure you only shop around for the most affordable rates, ideally from a third-party provider and not your original lender.
Consider A Larger Amount
It sounds ridiculous to borrow more money than what is needed, but if you can, do consider borrowing a larger principal amount. The reasoning behind this is that the larger the loan, the lower the interest offered by lenders.
Because of the modeling that some lenders use to construct their loan products, it sometimes yields savings if you borrow slightly more money than what you were planning to. Be careful with this however, and make a smart financial plan of how you’re going to pay it off quickly and affordably.
Learn The Loan Process
The process of borrowing cash is understandably rigorous and complex. After all, banks want to make sure they’re not losing money from their loan contracts.
But this inherent complexity in borrowing cash should not deter one from getting reasonable rates and conditions on their loans.
Consider using the expertise of a professional, like those found at Assurance Financial Group, to help you with any questions you may have.
Loans are notorious for being costly liabilities, but proper planning and the tips aforementioned above can make them nifty tools for temporary financial hiccups.Facebook.com/doable.finance