Tips for BORROWING

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 annual percentage rate amount

Make sure you know the difference between secured and unsecured loans. A secured loan means you can lose whatever you used to secure the loan 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 longerterm problems

Be really careful about signing up to interest-free deals. They’re only interest-free if you pay them off within a certain time period. If you don’t pay them off within this period, you will pay a very high rate of interest

Watch out for the offer of a payment holiday on credit card and loan agreements. This is where you can stop making payments for a short time, but charged extra interest once you start making them again. What seems like extra money in your pocket is actually a way to make sure you pay more interest to your lender.

Always try and pay at least 10 per cent of your balance every month on your credit cards. If you only pay the minimum amount, you’ll be paying for a very long time.