A reasonable selection of the loan is a prerequisite to save costs. However, when making a credit, you often make a mistake, resulting in increased interest and outstanding obligations. Avoiding the most common mistakes will help you save your money, make a loan in time and create a positive credit history.
The financial sector offers a wide range of credits. Loans presented in the market differ from each other as well as the purpose. Before borrowing, select which of them corresponds to your requirements and calculate the amount of the fee.
Mistakes you make when you take a loan
- Do not be aware of the effective interest rate – companies often offer only nominal interest rates when advertising offers, which does not fully include the full cost of the loan. Credit may be issued, commissioned repayment fee, fine overdue, etc. In order to fully calculate and compare costs, pay attention to the effective interest rate.
- Borrowing more than you need – you only need as much as you need, because you can spend a part of the amount you have taken but you actually pay a full percentage. As a result, you will have to pay the full amount of interest. Before taking a loan, think about what amount of money you need and just pay money when you have an unbearable situation.
- You can not pay the obligation – if you are not a solvent or you already have a few loans, taking a new loan is not a good idea. Your income will not be enough to cover the loan and the new liability will not solve your financial problem. In such a time it is best to refer to the organization where you have taken a loan and ask for restructuring.
- You do not know the lender’s proposals – part of consumers believes that the bank is the only place where the loan is available. Which is actually wrong, as there are many financial institutions in the market that stand out even better. Before making a decision, get acquainted with both banks and microfinance companies and make your choice.
- Do not ask the contract – the loan agreement includes important information, effective interest rate, the amount of expenses and your rights and obligations. Therefore, it is of great importance to know him before making a decision.