Here are some simple tips that will help you make an informed decision about
what kind to get, and who to get it from.
First ask yourself: do you really need it?
Can you manage without it? Is it for something frivolous, like a holiday?
Could you get the money by other means: part-time job, from a relative, the sale
an asset?
Don't put a monkey on your back if you can avoid it.
A loan varies according to:
The amount borrowed;
The interest rate;
The type of rate (fixed or variable);
The term (repayment time in months or years);
Deposit (downpayment);
Associated fees (broker, origination, prepayment etc.);
Insurance required by the lender.
You are buying money for more than it cost the lender. Simple.
It's a mistake to only care about the interest rate; there are also
arrangement fees and prepayment penalties to consider. Many 'no fee' credit
lines have a pre-payment penalty. This is how brokers and lenders make their
money. Work out the total cost of your loan before committing.
To ensure you get the best terms, keep your credit-line as small as possible.
Loan officers tend to count the total line of credit available as a
liability.
Pay off small debts before the due date. Cancel credit cards you are not
using. Consider their interest rates and fees, when deciding which cards to
keep.
If your spending is out of control, don't put your home at risk by getting a
home equity credit line to pay off your credit-card debts.
Shop for rates when the market is calm. Rates change from day to day, so
compare lenders. The quotes you get should all be from the same time period.
Submit a neat application form; it shows you're business-like and efficient.
It will be read and assessed by a human being; appearances count.
Only pay up-front fees to well-known institutions, or ones highly recommended
by trusted sources.
Don't sign documents without reading them. As soon as possible, before you
close the deal, review the documents you'll be signing, and make sure you
understand them, so you won't have to sign them in a hurry.
Keep a copy of every cheque you write for your loan. If you call your lender
about your loan, make sure you get the full name of the person with whom you
speak. Make a note of it. You may be dealing with a large bureaucracy, and will
need to refer to this conversation later.
If you find yourself in a dispute with a lender, don't send correspondence to
the same address you send your payment. You need to deal with the
decision-makers, not the account clerks.
