Whatever your reasons for needing or having to borrow money, there’s no denying that you have to have some knowledge of what you’ll be getting into financially as you cross the bridge to “Loan City.” Knowing nothing and then getting buried in debt and being poor is a nightmarish scenario for anyone! With that being said, personally borrowing money from banks or other lenders can help you financially if you do so for the right reasons (and for the right rate). Read on to find out what you should know if you’re a first-time borrower.
Table of Contents
Tips For First-Time Borrowers
Only borrow money if you have to.
Various advertisements for consumer goods and their seemingly convenient payment options (e.g., installments) can tempt you to take advantage of them. Such advertisements can be manipulative, making you believe that you’re paying a smaller price extended out over a longer period of time. However, the interest rate in payment options like installments will increase your debt. Although it is not necessarily an unwise decision to pay in installments, borrow money or take a loan, doing so is a financial responsibility stretched out over time. Therefore, it is important to assess your motivations for borrowing money and ensure it is completely necessary. A bad investment will lead to massive financial liability. So before borrowing or applying for a loan, take time to reflect and don’t be afraid to ask for financial advice.
Always borrow from credible financial institutions.
It is essential for any borrower to have a legitimate lender. Borrowers should do their research when looking for suitable lenders. It is also advantageous to have multiple options to know where to borrow from. Digital lenders have proven to be faster at verifying and processing loan requests. Disbursement often happens faster as well. Other features introduced by places that offer cash loans online include the options of availing of shorter-term loans and delayed repayments. It further allows borrowers to evaluate and compare interest rates, processing time, and other important criteria before deciding on their loans.
Always go for a loan with the lowest interest rate!
Personal loans usually have higher interest rates ranging from 10% to 20%. So even a small drop in interest rates will significantly affect overall loan costs. Remember, opting for low monthly payments over a longer repayment term, either due to convenience or a lack of current funds, will often come with the highest interest rates. As mentioned earlier, payments of small installments stretched out over a longer period will lead you to pay more in the long run. Hence it would be wise to scour the market for the best deals for your loan requirements. Consult a financial advisor if needed.
Borrow while you’re young.
Remember, your age counts when applying for a credit card or a loan. Banks, lenders, and other financial institutions will also scrutinize one’s work experience and employment history. Lenders generally offer loans more willingly to younger people with good employment records than older ones. Most lenders commonly believe that the younger ones are more capable of clearing their loans and debt on time than older people who may encounter health and employment issues. Additionally, non-senior citizens’ repayments are more prompt and consistent. So enjoy your youthful privileges while they last!
Author’s Bio:
Deinah Storm works in the corporate industry. She has quite a bit of knowledge about finance, loans, and investments as she worked for a finance and investment company before. Today, she finds solace in writing and educating others about wise financial planning, investments, and cash loans.
