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a gal with the gift of gab who knows what she's worth and is sharing her savvy with women like you
Here’s what amazes me: how easy it can be to borrow money. As long as your credit is decent, there never seems to be a shortage of people wanting you to open a new credit card, buy a car, use a personal or signature loan, even take out a home loan. Spending other people’s money can seem like a lot of fun… until the “catch” catches up with you in the form of crazy high interest or unrealistic payment terms. Or until you realize that you actually spent your money – money you don’t have!
As part of my financial makeover this year (doesn’t that sound more fun than “new year’s fiscal improvement resolution?”) I am taking a good hard look at loans to make sure that what I’m getting is really worth it. Maybe what I have learned can help you too.
If you want to spend money on something, there is probably a loan available for it! Incredible. Here are some of the more common types of loans and some things to keep in mind:
(Beware of: fast-talking car salesmen! Ladies, you know the deal – that car dealership is all about making the sale and making money off of you. Don’t fall for the pressure tactics; shop smart by securing loan approval at a good rate before you start test-driving.)
(Watch out for: details like variable rates and interest-only payments. A variable rate means lower payments now but the risk of larger payments in the future; interest-only payments may also be more affordable but don’t allow you to build any equity.)
(Remember: the fact that this type of loan reduces the equity in your home. Be careful how much you borrow, especially in today’s market conditions – you don’t want to find yourself owing more than your home ends up being worth later on)
(Keep in mind: the same concerns as with a home equity loan, plus remember that a variable rate means the amount you have to pay might not be as predictable.)
(Keep in mind: education savings options like state-run 529 plans. Saving early (and often!) for education means less need to borrow.)
(Watch out for: shorter repayment terms and loans with prepayment penalties.)
(Beware of: high interest rates, service charges, and predatory lenders. Seriously! This type of loan might seem like a good idea but it can get you in trouble fast. Do yourself a favor: get yourself on a good, functional budget if you haven’t already – that will help you get in the green and avoid the temptation of this type of loan.)
Now, like I said – there are plenty of organizations out there who would be willing to loan you money. The trick to being a savvy borrower is working with a financial partner who looks out for you, not just for themselves. That’s why I am a big fan of credit unions. Credit unions offer all the same services as a bank, but because they are individual not-for-profit institutions where every member has a stake in the game, you tend to get treated better and get a better deal on loan rates. After all – at a credit union you are a part-owner so the benefits come back to you in the form of savings, rather than lining the pockets of some fat cat somewhere. Make sure you are getting your money’s worth out of loans by visiting http://www.loansworthmore.org/.