Top tips for borrowing wisely

3/01/2016


If you need to buy a house, buy a car, or other expenses and you don’t have the cash, borrowing money may be your only option. Before you begin borrowing money, however, here are some handy tips to help you when you borrow money, take out a loan or use credit cards:

Spend time shopping around, researching what’s on offer and getting advice. You may think it will take too much time if you need a loan quickly but you’ll be paying the price for years to come if you don’t.

Always look at the total amount you will have to repay when borrowing money. A shorter repayment period may be better than a slightly lower amount.

Make sure you know the difference between secured and unsecured loans. A secured loan means you can lose your home if you don't keep up the repayments.

Work out your budget before you borrow to make sure you can afford the repayments.

Never borrow money on the spur of the moment. If you're buying something really expensive such as a car or furniture, think about payment options beforehand. The credit offered by the sales staff may be more expensive than other options.

Be careful about borrowing more money to pay off existing debts. Additional borrowing can seem like a good idea and may well help in the short-term, but can too often lead to more serious longer-term problems.

Salespeople use different techniques to persuade you to buy their product or service. Learn how to avoid sales pressure so you don't end up with something you can't afford and/or don't really want.

Don't borrow from Loan Sharks. If you're finding it difficult to get credit, see if  family or friends can borrow you some money. And in the spirit of goodwill, if they do lend you the money, please pay them back.

Remember, there may be other ways to get what you want without borrowing money. For example, you can save and buy the item outright, or put it on lay-by and gradually pay it off. Whatever your decision is, make sure that you are fully informed. 

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