Get A Loan, But Avoid Problems With These Important Guidelines

Need a loan to handle some urgent expenses? Don’t jump into making that decision without first knowing some very important things!

I’ll be real with you. Your life would be much better off if you have no debts, and you’d be doing yourself a huge favour if you critically analyse your situation and see if there is a better option to take. You can read up on how to do that here. 

If you still want to take a loan after doing so, don’t do it blindly. 

Whether you are borrowing from loved ones or official lenders such as banks, there are some principles that should guide how you go about it. Guidelines to make things not only safer but also prevent you from committing financial suicide!

Ready to know these important things? I bet you are. So here goes.

1. Don’t get a loan amount you cannot pay back

If you are getting a loan, try your hardest not to borrow more than you can afford to pay realistically. This means really assessing your inflow and outflow situation over the tenure, and making sure you don’t bite off more than you can chew. 

If setbacks like a job loss were to happen for example, can you still meet up with your payments? Do you have a plan B (C and D) means of paying back in place? Consider all these. 

2. Get a loan from a single lender

As much as possible, borrow from just one source. It would spare you a lot of stress if you take the money you need from one place instead of having multiple creditors with varied loan repayment conditions. 

If you are unable to manage this, at least have as few of them as possible lest you end up borrowing from Peter to pay Paul and plunging yourself further into debt.

3. Understand the terms of the loan

Make sure you thoroughly understand the terms of any official loan you apply for and have been offered. Be sure nothing is hidden in the fine print by reading the terms and conditions over and over again for a good understanding. Especially the penalties, including early-payoff penalties. 

If possible, have someone more knowledgeable like a lawyer review the loan agreement document for you. Ask enough questions so you know exactly what you are getting into.  Do due diligence on the loan company as well to prevent experiencing something similar to any of the horrific stories out there.

4. Know the total amount a loan will cost you

You know how you decide on renting a particular apartment or acquiring some real estate and just like that additional expenses like handling fees that make it all possible just start flying out of the woodwork? Well, the same applies to getting a loan, unfortunately.

You need to be aware of any and every additional fee involved beforehand. Origination fees (processing fee), pre-payment, and late payment fees. Get a clear estimate of the overall expenditure involved. Before signing on the dotted line, add up all the costs associated with the loan and not just the interest rate, to determine the total amount of money you would be paying.

5. Get the best loan deal you can

Even though you are the one in need of money and hence looking to get a loan, you still have some power at your disposal. Negotiate for the lowest rates and most favourable tenures possible on your loan. 

You can price shop and compare different lenders to make sure you are getting the best deal. Know exactly what would happen should you default on a payment.

Follow these guidelines to get a loan so you’d be in a great position than you would otherwise.

Already in debt and looking to get out of it fast? I have good news for you. Catch up on all of it here.