4 Mistakes To Avoid When Borrowing Money
Borrowing money is a tricky subject because, while you should try to avoid it as much as possible, sometimes it is the best thing to do. In certain situations, like buying a house or paying for house repairs etc. you have no option but to borrow money. That’s fine, but you need to make sure that you’re doing it right. Next time you find yourself relying on borrowed money, make sure you avoid these mistakes.
Not Reading The Small Print
Nobody wants to spend hours reading the fine print of a complicated contract but if you don’t, you might find yourself in trouble. A good example of this is Payment Protection Insurance. Although people are now able to claim that money back, thousands of people all over the world ended up agreeing to pay for something they never even knew existed because they didn’t read the fine print on their contracts. You don’t want to sign without understanding exactly what you’re agreeing to because it’ll come back to bite you later on. Before signing any paperwork, take it home and take the time to go over it properly so you know exactly what you’re getting into.
Too Many Interest Payments
When you’re borrowing on multiple credit cards, you’re paying interest payments on each one. That’s going to cost you a lot and people often end up paying the minimum amounts which just covers the interest, rather than actually clearing the debt. Credit card consolidation companies can help you get around this by rolling all of those separate debts into one loan. That way, you’re only paying interest on a single loan rather than paying it multiple times. It reduces the amount you spend and makes it easier to clear your debts.
Borrowing For Somebody Else
In the last couple of years, guarantor loans have taken off. People that don’t have a good enough credit score to get a loan on their own can get somebody to co-sign, agreeing to make the repayments if that person is unable to. If a friend or family member asks you to do this for them, you might think that you should because you want to help them. But you’ve got to consider what happens if they fail to make the repayments. All of a sudden, you’ve got another expense added to your monthly outgoings and that can land you in some serious financial trouble.
Lying On The Paperwork
When you apply for a loan you might get told that you don’t earn enough to borrow the amount that you need. There’s a reason for that; they’ll only lend you an amount if you can afford to make the repayments comfortably. If you lie on your paperwork and say that you earn more than you do, you might get the loan but when it comes to repayments you’ll struggle and you will quickly fall behind. You should only ever borrow what you can afford to pay back and don’t lie to get more.
Avoid these mistakes and you can borrow money safely and sensibly, making sure not to get yourself into financial trouble.