Browsing Category: "Borrowing"
How to Borrow Wisely
Borrowing wisely involves two major things: the right attitude toward the activity of acquiring the money and repaying it and the right drive to obtain the necessary information.
The problem with many borrowers is that they borrow thousands of pounds a year without even reading the fine print of the new debt they have just acquired. Fine prints are meant to be read- because you can scrutinize these if there are irregular business practices.
Shopping for credit?
According to Sherman Hanna, chairman of the Department of Family Resource Management:
“People would never think of buying the first refrigerator or television that they see, but they don’t apply the same principles to their search for credit. Most people will contact just one lender when they need a personal loan, not realizing they could possibly save a significant amount of money if they were more selective.”
Borrowing, or the acquisition of credit is never a linear, one-sided process. Just like looking for the best products to put in your home, credit is disposed off by different companies with different aims in mind.
Some lenders are outwardly brutish- they won’t care whether you’re driven down by high interest rates and a short grace period. Older, more reliable and legitimate lenders on the other hand, have more humane policies and binding contracts.
The education connection
According to a study made by Ohio State University, the educational achievement of a person often has a bearing on his or her “credit shopping” abilities. According to the study:
“Education was the most important factor related to comparative shopping for loans. Consumers with a college degree were three times more likely to shop for a loan than those without a high school diploma, after factors such as income and size of loan were taken into account.”
Borrowing from relatives
If you feel queasy about borrowing from lenders, you can just borrow from your relatives. However, keep in mind that borrowing from relatives does not give you the license to become a bad borrower. Always approach the activity of borrowing as formally as possible.
If possible, assure the lender that you will pay with interest within a specific time period, and that you will repay the debt in full. This approach is especially effective if you wish to borrow money to start a small business. Your relatives can pull their resources to make the business work.
Also, remember to put everything that transpires between you and the relative-lender in writing. This formalizes everything, and if something goes awry, both the lender and the borrower have something to hold on to, to settle disputes.
