If you really do need to borrow some money, there are a number of questions that you need to ask yourself AND your lender before you take out that loan.
Ask yourself:
- Are you borrowing this to pay for a long-term item, such as a house, car, major appliance, or are you using the money to help with your current living costs?
- Is there another big item that you are going to have to borrow for in the near future? How will this affect your ability to make the repayments?
- How secure is your (or your partner's) job over the period of the loan?
- Can you afford the repayments on this debt if your (or your partner's) overtime or bonus is cut or disappears?
- What does your total debt add up to after you've borrowed this?
- Is this the cheapest way for you to borrow for this purpose?
Ask your lenders:
- What is the APR?
- Is the interest rate fixed or variable over the period of the loan?
- What is the length of the loan period?
- Is the loan secured on your home?
- Are there any set up fees?
- Are there any penalties for missed or delayed interest payments?
- Are there any penalties for early repayments?
- Are there any other charges?
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