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A Guide for Borrowing Money from the Bank for the First Time – 2020 Guide

Unless we are born into an incredibly wealthy family or win the lottery, we most probably will have to borrow some money at some point in our life. This is a completely acceptable way of doing things and in some cases is encouraged by the banks, we live in a system that gives good credit for borrowing money. The better our credit rating is, the better our perks will be. Having said that, it is important to remember that borrowing money can be a risky business, so understanding the finer details is vital to being financially healthy.

Once we have done our research and considered all the risks, only then can we take the next step at borrowing money.

Seek Advice

As with anything, it is important to ask for advice before doing something we have never done before. One wouldn’t buy something without having a basic understanding of it first, and this is more so the case when it comes to big decisions like borrowing money. Fortunately, we live in a world where there are plenty of people around that will help us. Loan officers are brilliant people to speak to in this situation as they deal with this exact situation all day, every day.

If you have hired a loan officer before you will know how important they are in ensuring you have made the right decision. You might even want to pursue a career in this after you’ve successfully been helped. If that is the case, then check this site, in case you want to help others in the way you were assisted. On top of that, it can be a sustainable career if you can land a job in a decent company.

Be Realistic

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There is nothing worse than biting off more than you can chew and that can be very easy to do when borrowing money. We have to be realistic when taking out a loan because you need to possess the ability to pay it back, this means you will need to be earning a good amount of money each month and still be able to survive after your loan payment comes out.

If you start to miss payments on your loan, then your credit rating will be affected in a negative way which will affect your borrowing should you need to in the future. Work out how much money you are going to need and borrow that amount, and that amount only. Don’t get any more than you need to.

Be Safe

When borrowing money, always make sure that it is from a trusted source. Don’t borrow from any company with negative reviews in regards to lending. You could find yourself in a sticky situation because of the bank you have chosen to borrow from. Read and research as much as you can about the company before deciding to go with them, some companies will charge an excessive interest rate leaving you completely out of pocket.

Research Your Loans

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There are so many different types of loans you can get hold of these days and it is important to find yourself the best deal possible. No one will loan you money interest-free, not from the bank anyway, so it’s worth doing your research and finding out which one gives you the best possible deal.

Some might offer a 0% interest for the first 6 months and stay very quiet about the fact the interest rate goes up to 30% after those 6 months, so in this instance, it would be better to go with a bank that has a fixed interest rate from the start of your lending term. Some banks come with some perks when taking out a loan so take a look at everything that’s on offer. The more research you do now, the better you will be in the long run.

Overpay If You Can

The faster your loan is up, the quicker you get back to not paying interest. This will also help your credit score. When it comes to credit cards, paying your entire balance off at once is hugely beneficial if you use it that way every month, so it is worth trying to do it when you can. When it comes to larger loans such as a mortgage overpaying can be beneficial for many reasons, so if you can I would suggest doing so. It helps your credit rating and if anything were to happen to you, you would be covered for a little while using the money you’ve overpaid with.

Avoid Making Multiple Applications

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It is never a good idea to make multiple credit applications in a short space of time. This is because it will leave a mark on your credit account/record, these marks can be seen by every lender you apply to when they check your report. If you have too many of these marks on your record, then it may seem as though you might be a little desperate for money, which in turn will make lenders less likely to give you any cash.

Before you apply for anything do your research first and find out which loan is best, this way you’ll only have to make one application. Some lenders accept anyone with a bad credit rating, and whilst this may seem like a good idea at the time you have to look at the small print, the percentage rate on these loans is astronomical and will often leave you in a worse situation than you were in before.

Borrowing money is not a simple process if you are going to do it correctly, and it should not be something you do without seriously thinking about your situation. If you are in a position where you can borrow money and successfully pay it back on time then it is a good thing to do. But on the same token, don’t borrow money to get yourself out of any trouble, especially if you can’t pay it back. Be sensible and stay financially safe.

About Abdulah Hussein

Abdulah Hussein

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