Borrowing money is attractive for many people. And if you want to borrow money, of course you want to do that well, safely, quickly and smartly. How do you deal with this? And how dangerous are terms such as 'low interest rates', 'easy' and 'cheap'? Here we gives you some important tips and hints about things like the use of loans and the role of credit, interest, tax and planning before you take out a loan for yourself.
Why borrow money?
Think carefully about the purpose for which you take out a loan. Do you really need a loan or do you opt for the easiest solution? Many people take out loans for small investments, while in practice they can easily save on their expenses. Expensive habits, enthusiasts, and memberships seem to be not too expensive, but you will be amazed at how much they can cost you on an annual basis. So only take out a loan if it serves a clear purpose that is defensible in your current situation.
Calculate your financial space
Before you take out a loan , you would do well to put an overview of your monthly expenses and income on paper. Consider whether you have sufficient financial leeway in the future and make and plan to repay your loan. Also take into account unexpected setbacks: if you do not have a buffer to pay for this broken television, your loan can feel like a noose around the neck.
Effective interest
Consider in advance that lenders often show only part of the truth. They often advertise with 'nominal' interest ("only x, 0 percent!"), Or the interest rate that you have to pay per year. In practice, however, there is also such a thing as an extended or 'effective' interest rate, which for example calculates the closing costs of a loan. So keep this in mind before you start borrowing money.
Look and compare
When you take out a loan, carefully compare the various credit providers. Their are many websites offer Payday Loans, find more sites like spotloan and Request several quotations. Do not confuse yourself with words such as ' cheap ', ' fast ', ' low ' or 'easy' and carry out additional research on the internet. Pay attention to additional conditions, closing costs and consumer assessments. Also be critical of internet sites that compare loans, here too vigilance and an eye for underlying details are important.
Fixed and variable interest
When taking out a loan, pay attention to the type of interest: is there a fixed interest rate that remains the same over a longer period, or a variable interest rate? With a variable interest rate the interest rate can change regularly, so you can be more expensive than you thought. So pay attention to this. There are also loans where you only pay a certain low interest rate in the first few months, after which your interest is automatically increased. So think ahead, by also planning your loan in the long term.
Pay attention to tax deductions
Some loans justify a certain deduction of your tax. This concerns, for example, a loan that you take out to renovate your house that is in a poor condition. Pay attention to this type of tax benefits, since they can save you a lot of money. Also borrow money is often without benefits.
Finally
It all sounds so nice: you take out a loan from a lender, which enables you to make new purchases or investments at an attractive interest rate. However, do not forget that lenders, no matter how cheap , reliable and customer-friendly, also approach you in the end with one goal: to earn money from you. Therefore choose the lender that suits you and do not go ice overnight.
Misty Jhones