19 Nov Navigating the Loan Maze: Tips for Smart Borrowing
South Africa’s low-earning consumers face a multitude of challenges in their financial capacity. Having access to controlled loans through regulated lenders has the potential to improve difficult financial setbacks, but navigating the loan maze takes consideration and care. At Credit Boost, we have valuable tips for smart borrowing, giving our clients the best chance of maintaining good credit.
Tips for Smart Borrowing:
Check your credit
Start by checking your credit report to determine your credit score and see your finances from a lender’s perspective. The higher your credit score, the better chance you have of getting good loan repayment terms and decent interest rates. A good credit score is 640 and higher, while anything under 615 is considered low. Many things affect your credit score, including your payment history, the amount you currently owe, and the length of time you’ve been an active credit consumer. For this step in the borrowing process, you can make use of Credit Boost’s FREE assistance. We will help you to get your credit report easily, to give you the insight you need before taking out a loan.
Determine what you can afford
Take a careful look at your budget. What are your necessary expenses? How much do you have to work with? Once you know what you can afford to borrow based on your own reflections, you can start planning the amount you want to lend and what you plan to repay every month. Be realistic about your budget and don’t borrow more than you can afford. At Credit Boost, we only work with lenders who are National Credit Regulator approved, and who have demonstrated considered and legal lending practices, by only entering into fair credit agreements.
Avoid variable interest rates if possible
Taking out a loan with variable interest rates makes it very difficult to plan your budget and is much more risky than a loan with a fixed interest rate. A variable interest rate fluctuates with the prime market rate, which can sometimes be unstable. Being able to plan your budget is integral to avoiding missed or late payments due to lack of funds.
Note that some loans don’t allow for fixed interest rates. In these cases, you need to be clever about your loan application. Remember that you are paying back a loan as well as interest and that the interest rate may change as the lending rate changes.
Only borrow what you need to
Life does not come with a handbook and even with savings in place, you might need to borrow money to afford an urgent expense or get a handle on an important situation. Make every effort to avoid high credit loans that tie you into long-term commitments, unless they mean something to you, fit into your budget, and match your goals.
At Credit Boost, we take the responsibility of comparing different lenders off your shoulders, by connecting you with loans/finance that are the ideal fit. We take all the important steps to ensure that you are accessing the best possible loan.