Everybody borrows money at some point in their life. While various financial gurus make living off of cash sound like the ultimate virtue, it simply isn’t realistic for most people. And before you say “I’d never get a loan,” think again. Every time you use your credit card, or use utilities like natural gas and electricity before your bill comes due, you’ve taken out a small loan.
Since these are clearly common behaviors, it’s all about making sure that you manage your loans well, and that you live in such a way as to bring better and more affordable loans into your future life. There are many ways to do this, some of which we’ll discuss below.
Working For the Best Rate
Your APR is the number that tells you just how good or bad a loan is for your wallet. The APR is the annual percentage rate, and it is made up of the interest and fees that you will pay every year, for the privilege and responsibility of getting to spend someone else’s money.
The best and most straightforward way of securing loans with low APR is to have a good credit score. You can improve your credit score in many ways, but if this seems impossible, you’ll have to shop around.
Many financial institutions are in place simply to provide expensive loans to people who can’t get a loan any other way. But there are affordable alternatives. When trying to separate the wheat from the chaff, always make sure that the terms are clear, and that you won’t be charged fees for paying off a loan early. If you must get a loan with a company that charges an arm and a leg, paying the loan off quickly is your only recourse.
Paying on Time
There is no better way to have a loan make you go broke than to be tardy in your payments.
This will hurt you in a number of ways. Being late or defaulting may cause lots of fees and penalties to kick in. In addition, the fact that you’ve been an irresponsible lendee will cause your credit rating to go down as a result. This, in turn, will make all future loans more expensive.
Finally, if you are deficient in multiple loan and contract payments, you may be forced into bankruptcy, which will damage your finances for many years to come. The only remedy is to make sure you don’t get in over your head with borrowing and debt/credit. If you borrow and are still able to live beneath your means, you will be well on your way to affordable living while in debt.
Borrowing Is Normal
Borrowing is a part of the normal adult financial life. And though many people all around you get carried away with the responsibility and possibilities of borrowing and credit, this doesn’t mean that you must as well. For every person who gets swept away by debt, there is another who quietly pays their loans down, never letting their finances slip. You can be that person too.