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Educational Consumer Tips

Finance & Loan Tips

Author: Better Business Bureau
Published:

No matter how much money you are borrowing, or what kind of loan you are getting, there are some basic guidelines to follow that will help you make better decisions about your loan.

QUESTIONS FOR YOUR LENDER
Ask these questions of several different lenders to ensure that you are choosing the best lender. Each question should be carefully considered based on your situation.
Ask your lender:
How much are my monthly payments?
Ask yourself:
How big a monthly payment can I handle, given my income and my other financial responsibilities? What is the smallest loan I can take out that will satisfy my needs?
Ask your lender:
How many years will I be making payments on this loan?
Ask yourself:
If it will be a number of years before the loan is paid off, do I have an income that is secure enough to know that I will be able to make payments well into the future?
Ask your lender:
Is the annual percentage rate (APR) fixed or adjustable?
Ask yourself:
If the APR is adjustable, will I be able to make sufficient payments if the rate increases?
Ask your lender:
Will I be charged any additional fees?
Ask yourself:
Are these fees reasonable? How do they affect my ability to pay off the loan? Are these fees refundable if I refinance my loan?
Ask your lender:
Will the interest rate increase if I default on my loan?
Ask yourself:
If the interest rate increases, will I be able to make the necessary payments?
Ask your lender:
Does it help me in the long run to refinance my loans?
Ask yourself:
If I refinance, I may pay a lower monthly premium, but may end up paying more in the end. Is it worth it for me to refinance?
AVOID ANY LENDER WHO?
*tells you to indicate on your loan application that your income is higher than it actually is.
*pressures you to apply for a loan or to apply for more money than you need.
*pressures you into monthly payments you can't afford.
*pressures you to sign documents you haven't read.
*promises one set of terms when you apply and gives you another set of terms to sign with no legitimate explanation for the change.
*tells you to sign blank forms and says they'll fill them in later.
*says you can't have copies of the documents you have signed.
*asks you to sign a loan that has credit insurance or any extra products you didn't want.