If you have to borrow , Do it after some thought!! (General Comments in general)

Member Name: bkrajiv

Product:	General Comments in general
Date:	06/10/04 (45 review reads)
Rating:

Advantages: read the review

Disadvantages: read the review

While I agree with consumer groups and government lobby groups that the financial services industry needs to learn a few lessons about responsible lending, I would suggest that, ultimately, it is still the consumer who has to sign on the dotted line whenever he( not being sexist!!) wants to borrow money. In essence, let us think about not onlyu the short term situation but the whole picture.

Of late, we have been reading in the papers of how people commited suicide due to excessive borrowing, this is saddening but where are we going wrong as a nation?

Not only do people need to think carefully before borrowing or buying on credit, they also need to seek good, impartial advice when they are struggling with debt.

I have tried to summarise what I think is a "checklist" of deciding how much to borrow and if followed it should minimise the above situations or perhaps even avoidt hem?

1. Can you really afford it?

It's a sensible question, of course, and one that people should consider more seriously. Often, we only think about short-term affordability. We may feel that that we can make repayments this month and next month and the month after, but how sure are we that we'll still be in a position to do so this time next year? We assume we're not going to lose our jobs, fall ill, or get divorced, and that nothing will stop us from being able to repay what we've borrowed. Besides, we obviously want that new kitchen or holiday or car now, so we go for it anyway. Is it the right decision, though?


2.Read the small print before signing

Aaaargh! We can't think of anything more tedious than trying to decipher the small print, but it has to be done. If something's not clear, ask! How many people do you know who see the error of their ways, try to switch to better deals, only to discover that they've got to stump up a hefty redemption penalty? Don't be one of them - read the details before you sign in the first place.

3.Check how much you'll pay back over the length of the loan

This is another thing people often ignore. If you borrow £1,000 on instant credit at an APR of 25% over five years, you'll pay £675 in interest for the privilege. How much do you really want that widescreen TV? Do you really need it right now, or could you save up for it? What's so wrong with your current television set, anyway?

4.Watch out for optional extras, especially payment protection insurance (PPI)

This is a particular favourite with lenders. Often, their application forms require us to tick a box if we don't want payment protection insurance. Since many of us don't bother to read the small print, it's possible to get lumbered with paying extra for something that we probably don't even need. You don't need PPI or won't be covered fully if you're: self-employed, on a short-term contract, have savings that could cover the monthly repayments temporarily, or have any other income protection policy.

6.Beware of loans secured on your home – you could lose it!

Sometimes, there are good reasons for releasing some of the equity in your home, but you need to think long and hard about borrowing money against the roof over your head. If it's for something that will add value, such as a new kitchen or a loft conversion, then a secured loan or bigger mortgage may be worth considering. But are you sure that you want to risk your home, just so you can enjoy a luxury holiday that you'll barely remember by the time you've paid off the loan at the end of the mortgage term?

And finally...

If you're intending to borrow money, make sure you do it for the right reasons - and think about the tips above. Don't overextend yourself and, if you think you may already have, contact the Consumer Credit Counselling Service which will help you to sort out your finances for free. (Avoid debt-management companies that charge fees- you're wasting your money , or contact me!!).

Summary: