4 Tips to Make Smart Borrowing Decisions

Applying for a loan is often a necessity. Most people are unable to purchase a sweet new ride or a house upfront without one. Although borrowing money is common, one can easily get trapped in an endless cycle of debt if spending is not kept on track.

When you are looking for a personal loan in the market, it is important to make sure you opt for the loan that best meets your requirements. Many Kiwis need extra cash to cover their unexpected costs until their payday arrives. An expired WOF, a visit to the dentist or back to school costs could be small but are often urgent. Take control of your financial situation and get a loan that best suits your requirements.

Smart borrowing isn’t that hard. To help you with it, we’ve rounded up the following tips:

1. Know your credit rating

All of your financial borrowings are recorded on your credit reports – be it a loan, overdraft, credit card or mortgage. Many loan providers may evaluate your credit rating before deciding to grant you a loan. A good credit history will make it easier for you to get a loan with a decent interest rate, so it’s always best to know your borrowing power.
However, if your current credit score isn’t what you’d like it to be, you may consider getting a small personal loan from an online New Zealand lender. If you meet the basic requirements and can repay the loan, online lenders in New Zealand can assess your loan application.

2. Don’t borrow more than you need

Some people borrow money without thinking about if they can comfortably afford it. It’s worth remembering that you’ll be paying back interest on the amount right from the day you borrow money. It is always suggested to look at all the available options before borrowing money. Make sure to ask yourself:

• Do I actually need to make the purchase now or could I put it off without incurring any extra fees?
• Am I able to take some money from my emergency fund or savings?
• Am I able to borrow from friends or family?

If your answer for the above questions are not positive, then you should carefully calculate the actual amount you need to borrow to cover any unexpected costs. Also, it is important to borrow only when you need it, as there’s no point paying interest on the loan amount if you’re not even using it!

3. Read the fine print

As you compare and try to find the best loan option in New Zealand that suits your requirements, it’s quite easy to get dazzled by the interest rates of different lenders. Many people ignore the important part of reading the fine print that’s listed in the disclosure statement. There’s often a lot of important information enclosed in the fine print, including the terms and conditions or information about penalties and charges.

If you’re not aware of all the charges or ongoing fees at the beginning of signing a loan contract, then you could be putting an extra dent in your pocket. If you have applied for a fixed term loan and later wish to repay early, then it’s important to make a note of any exit fee or early repayment cost.

4. Don’t be afraid to ask questions

With the numerous options available to get a loan, sometimes it could be difficult to choose the one that closely matches your needs. There’s a chance you could misunderstand the information provided in the terms and conditions. If you find yourself lost and muddled, simply contact the customer service teams, who will be happy to assist you and provide the requested information on cash loans.