Best credit tips to inform key decisions

For whatever purpose your loan is, ask yourself if that is what you need and determine if you can really afford it.

11:42 16 October 2013

There are many things we need credit for, but before you indulge yourself in more credit, have a read through some of the best credit tips to guide you:

•    Analyse your capability to make repayments before committing yourself to any credit.  Do not be persuaded into something you do not need.

•    Before choosing any credit, try to consider several types of credit and different bank loans and evaluate each one. The first offer is not necessarily the best offer you could have.

•    Study the application forms before signing. It is advised that you develop a clear understanding of what you are getting into.  Once the form is signed, there is no turning back unless otherwise specified that you can change your mind within a certain period.  And if ever it is possible, how much will be the charged for that?

•    Get the exact details of how much your repayments will be including the interest and fees and analyse if it is worth it.

•    The best way to compare similar credit products is by comparing the APRs. Narrow down the list by considering those with lowest APRs.  Check then the terms and conditions of the proposal, paying attention to all details including the small ones. Aside from the APRs, there are also factors or details you need to consider before making a decision which credit to choose.

•    Determine what other fees could be charged such as broker’s fee if there is any.

•    How long is the repayment term? Bear in mind that the longer the term, there will be more interest you need to pay.

•    Verify if protection insurance for your payment is included in the contract. You may not be covered if you are self-employed or in a short term contract.

•    Be reminded of the risk of losing your house if you use it as collateral for your loan.
•    Be cautious before agreeing to become a guarantor for someone else’s loan because you could end up paying the loan yourself when he or she fails to pay for it.