People borrow money for different reasons such as growing their business, purchasing an asset, dealing with an emergency, pursuing further studies, among other reasons. Whatever your reason may be, it is always important to plan for credit and consider the following factors:
Credit scores are a representation of your creditworthiness, based on credit repayment history. A low credit score signifies bad debt management, which may result in your loan application being rejected, or high-interest rates being applied to the loan. Therefore, make sure that your credit score is free from any strains, as many lenders will assess your credit history before they approve your loan.
When you borrow money, you are required to repay the original, or the principal amount and interest charged on the principal amount as per the approved interest rate by the Regulator. You need to factor in the cost of borrowing when considering taking up a loan.
Read the terms and conditions of the loan carefully before accepting it. Before taking out or providing a loan, you must understand every aspect of your loan agreement. This will ensure that you are not signing yourself to be legally responsible for something that you were not prepared for. Look at the interest rates and fees; you may be able to negotiate the terms of the agreement. Take note of all charges such as processing fees and ensure you seek clarity from your relationship manager when in doubt.
Ability to repay the loan.
Before borrowing, evaluate your ability to repay the loan. Ensure that your income is enough to pay the loan. You can also prepare for loan repayment by coming up with a working repayment schedule that could include equated monthly installments or other favourable plans. You can discuss the repayment plan with your banker.
It is always important to discuss with your banker who can advise you on financial management and what type of loan suits your needs. Family Bank takes pride in transforming people’s lives through access to flexible and affordable financial services. Talk to us today because you can always bank on Family.