OCT 22, 2013

What are the most common loan mistakes?

When it comes to taking out a loan, any mistakes or poor choices you make can be extremely costly. With your future at stake, it’s important to treat any loan decision very carefully.

But many don’t.

So let’s take a look at some of the most common mistakes people make when they’re looking to take out a loan.

Applying to the first lender you find

Applying for a loan is a lot like buying the latest television or the newest laptop. You need to shop around to get the best deal.

Very rarely will you get value for money if you walk into the first shop you see. You need to first do your research.

So you need to ring around and check rates with other lenders before you’re able to come to an informed decision.

Unachievable repayment obligations

You need to think very carefully when it comes to agreeing a realistic and workable repayment structure.

Remember than terms – in most instances – will be negotiable. So you’re not obliged to accept the first terms put to you.

That said, don’t put yourself on the spot. Always go into a meeting with a loan provider with a clear and detailed account of what is reasonable. Know exactly what you can afford, how long you’ll need the loan and how long it’ll be before you’re able to pay it off in full.

Not seeking a short-term solution

What kind of financial needs do you have?

If you only need money temporarily – to smooth a transaction while you’re money is tied up in other areas, for example – then applying for a full bank loan probably isn’t the best option.

Bridging loans are much easier to obtain and only take a few days for the money to appear in your account.

Not reading the small print

Never rush into any loan agreement without first reading the fine print. Never assume that the print is small because the message it contains is unimportant. Far from it.

The fine print is usually where annual fees bank charges and additional costs are detailed, so make sure you go through it very carefully before you sign anything.

Created on 22nd October 2013
Back to list