It is crucial you learn a lot of things before you go and take a loan. Even you may be urgently pressured for a loan; a wrong mistake due to ignorance could put you in permanent debt. I have summarized 7 things below that are more important.
- What type of loan do you intend to take and why? You might feel you know what you need the money for but you need to research well. For example, you may need a car. But car loans differ. You could decide to go for a long term car loan or a payday loan to pay back the loan when you are paid your salary. There are indeed different types of loan such as auto loans, commercial and business loans, construction loans, real estate loans, refinancing, mortgage loans, secure loans, personal loans, student loans and lots more. Choose the type more appropriate to your situation and do research on it.
- How much time would you like before repay? This depends on you. I believe faster is better. The sooner you repay your loan the better. Take the time to decide on what time is comfortable for you before you sign any contract.
- Avoid any complex loan repayment system. Avoid any complex loan repayment system. Go for a scheme that pays a fixed interest rate over a particular period of time. Run away fast from compound interest.
- Time to source for the lending company. Get searching for lending companies. If you find one or even two don't stop searching. Continue searching. Get as many as possible so you have many options. You might surprise yourself with the results. The more companies the better. This will give you more confidence in the negotiation. Meet them with them if possible or call them then tell them you will get back to them. Don't feel pressured in anyway to sign anything. Take your time to compare rates.
- Time to get a lawyer. When you find the company you want to work with. Go through the contract with a professional, read between the lines, and be on the look out for any hidden or double meaning in the loan contract. Some companies actually charge you if you repay the loan earlier than scheduled. Get a professional to go over the contract with you before you sign.
- Time to set a personal repayment goal/ action plan. What are your sources of income? Your salary may have been what you used to get a loan, agreed but what other options could you have to make extra money. You may be saying to yourself if I had other options why would I have gone for a loan in the first place? What I would say to that is simply we need bulk money for different reasons. However, the little opportunities around us can turn to a big one if managed properly. Take the time to look around you for small opportunities for extra income and set have a plan ready or a bank account to just drop it in. That way you will be able to repay the loan as quick as possible. Create the plan and stick with it. Be strict with yourself. It's only temporary, after a while the payment would be completed and you would be free of debt.
- Avoid taking another loan. Do not take another loan. I personally do not support this. Concentrate on repaying one loan as soon as possible. That is why you should apply for as much funds as you need when you are going for the loan in the first place. Double loan double problems. But if you must, follow the rules above too with the second loan.
