Borrowing money sometimes becomes a necessity. If you need to buy a house, buy a car, or even pay your grocery bills or other expenses and you don’t have the cash, borrowing money may be your only option. Before you begin borrowing money, however, read on for the top 10 tops about borrowing money wisely.

1. Top 10 Tips
About
Borrowing
Money

2. Borrowing money sometimes becomes a necessity. If you need to buy a house, buy a car, or even pay your grocery bills or other
expenses and you don’t have the cash, borrowing money may be your only option. Before you begin borrowing money, however,
read on for the top 10 tops about borrowing money wisely.
1. A good credit score can help you borrow money
reasonably: Your credit score is a three digit number that
lenders use to determine whether you are credit worthy.
You can build a good credit score by using credit wisely:
not borrowing too much money and always paying back
your debts on time. The better your credit, the more
lenders will be willing to lend you money for a reasonable
fee.
2. Borrowing money can sometimes be a good thing:
While some believe that debt is universally bad, that isn’t
true. If you borrow money to buy a home and the home
goes up in value, then you have essentially leveraged the
debt to increase your net worth. Likewise, if you borrow
money to start a business or go to school, that can be
considered good debt since you will likely increase your
income through your borrowing.
3. There are several different ways to borrow money:
Most people borrow money on credit cards, and take on
mortgage loans and school loans. You can also borrow
money through a personal loan- which is a form of
unsecured debt in which you apply at the bank or with a
lender and don’t pledge any assets to back up the debt.
A personal loan can sometimes be a better option if you
need to borrow money than credit cards, since credit
card debt may have a higher interest rate.
4. Always budget when you borrow money: When you
borrow money, you will need to be able to ensure you
can make the monthly payments. Failure to do so could
result in your creditors suing you or- in the case of
secured debt such as a car loan or a mortgage- taking
back the house or the car or other collateral. Thus,
understand what your monthly payment will be on any
loan you take and make sure you can afford it before you
borrow the cash.

3. 5. Understand your interest rate: The interest rate is the
amount you are charged to borrow the money. It is
normally, but not always, stated in terms of an annual
interest rate. Make sure you understand exactly what your
interest rate is and how you are being charged the interest.
Some companies, such as payday loans for example, charge
an extremely high interest rate- upwards of 600 percent in
many cases- while personal loans, mortgages and car loans
tend to have much lower interest rates- usually under 10
percent annually if your credit is good.
6. Understand the terms of your loan: There are usually many terms
associated with your loan in addition to the interest rate. For example, you
may not be able to prepay your loan without paying a prepayment penalty.
You may also incur late charges if you don’t pay by a certain date. You need
to understand those terms before you sign on for a loan.
7. Think carefully about how much you are borrowing: The
more you borrow, the more you will ultimately end up
paying in interest and the more you will have to pay on a
monthly basis to pay back the loan. Think carefully about
how much you are borrowing and don’t borrow more than
you need or more than you can afford.
8. Understand the application process: When you apply for a loan, you
usually need to supply your credit score. You may also need to provide
additional information such as proof of your income. Understand exactly
what is needed from you to get the loan. You will also want to know how
long it will take you to get the cash from the loan, especially if you need
the money immediately.
9. Consider the repayment period: This is the amount of
time you have in which to pay off the debt. The shorter the
repayment period, the less you will ultimately end up
paying in interest but the more you will have to pay on a
monthly basis. If you can afford slightly higher payments,
you may want to opt for a shorter repayment period on the
loan if it is an option, in order to save money in the long
run.
10. Make a plan to pay off debt: You need to understand before you
borrow the debt exactly how to pay it off and how long it is going take you
to do so. You can thus ensure that taking on the debt won’t interfere with
any of your other financial goals.
Source:
http://enlightenme.com/top-10-borrowing-money/
Image:
https://www.cashstop.com.au/