Borrowing - Considerations when getting a loan

Nearly all consumers will have to borrow money during their lifetimes to increase their purchasing power to buy items such as houses and cars. Careful planning (budgeting) will ensure that expenditure does not exceed income. However, nearly all consumers will have to borrow money during their lifetime to increase their income, or to cover items involving large expenditure such as buying a house. Therefore borrowing is necessary to bridge the shortfall between income and spending.

It is important that you consider the following before borrowing:

1. Never borrow long term to pay short term.

2. Always review your loans with a view to refinancing at a lower rate or shortening the term of your loans.

3. In the long run, the aspect of a loan which is most expensive is the length of time that you intend to pay it back.

4.1 Credit
Borrowing money or buying goods and paying for them later is called credit. If you plan carefully you can ensure that expenditure won't exceed income unless absolutely necessary...

4.2 Types of credit
here are many different types of credit available form various sources...

4.3 Credit Institutions
When you borrow money from a Bank, Finance company etc. you will have to go through the process of filling in an application form and most likely be interviewed by the company...

4.4 Cost of Borrowing
You will have seen in the section on saving mention of interest and what it is. Interest is the charge for borrowing money in the form of a loan...

4.5 Can't pay?
If you fall behind in payments and cannot repay credit it is imperative that you contact the person or institution who extended the credit...

4.6 Alternatives to Credit
Getting into debt can be like living with a mill stone around your neck. Because you may find yourself in a position where you must maintain a high level of payments, you cannot easily change your job for one which pay less but offers a more relaxed lifestyle...