Once you get your debt and credit under control it doesn’t necessarily mean your owing days are over. Most likely big purchases are in your future that will require you to borrow money. However, before you start panicking about falling into debt again, consider the following tips that can help guide you into smart money borrowing habits.
– You always want to borrow as little money as possible. This means putting down the maximum amount you can for a down payment. For example, if purchasing a car you want to make a large down payment so you can avoid paying more than the car is really worth over time.
– Shop around. Compare credit lenders such as banks. You want to borrow from a lender that can offer you the lowest annual percentage rates and fees.
– Try to avoid borrowing from a financing company. These companies tend to charge higher interest rates and could have a negative effect on your credit report. Borrowing from a financing company might hurt your credit because other lenders may see that as a sign that you didn’t qualify to borrow from other more reputable lenders such as a bank. Therefore if you have to take out a loan always try a bank or credit union first.
– Never agree to the first interest rate or annual fee presented to you by a lender. There is always room for negotiation and if asked most lenders will reduce these rates.
– You should always read every document you are presented with. Credit companies and lenders are required by law to disclose and provide you with details including APR, their payment calculation methods, finance charges, and any other additional fees they could add on.