Don't Borrow Money,Is A Trap

Although there are some times when borrowing money is financially a sound option, there are other times when borrowing money will only lead to larger problems. Here are five times that it is unwise to borrow money. When you haven’t done your research Don’t get a loan from the first bank that you walk into. Use the internet as one of your valuable tools to find your best rates. Although a one percent difference might not sound like a lot, on a large loan such as a mortgage, it can equal upwards of $10,000 that you lose. Similarly, it will take you longer to pay back such a loan, and you will be indebted for a longer period. You want to get your loan from a reputable bank or credit union that you feel comfortable with. If you are uneasy about any of the bank or online bank’s practices, then simply choose not to borrow. It’s your money: make sure you are dealing with someone you trust. Try asking friends and family for recommendations. When you are solicited If you get offers in the mail or in your email to borrow money, don’t take them. If you need to borrow money, you will seek out the lenders. It is bad news when the lenders seek you out. This is particularly applicable to credit cards. Credit card companies often have aggressive marketing campaigns designed to lure in new consumers. People sign up for a credit card, thinking that they have made a good decision, or that they will never use the card. If you use your card and don’t pay the balance off monthly, you are paying too much interest. Use your debit card instead. Remember: retail and gas credit cards are also credit cards, and are likely to have an even higher interest rate. When you are offered repeated refinancing Don’t refinance your loan frequently over a short period of time. You might be charged fees for each time you refinance that will add up over time. Although it might seem like you are getting a better deal by refinancing your loan in the long term, the short term costs for these changes can be considerable. Often, there is fine print in these agreements that will cost you money. You want to get a loan from an institution (often a bank or credit union) that can offer you stability and security. You not only get peace of mind knowing what your monthly payments are, you will get a better deal from an institution that is not trying to charge you constant refinancing fees. Occasional refinancing might be fiscally wise, but be sure that you are dealing with an institution that you trust. From fee-based institutions You will have to pay interest on any money that you borrow. You want to pay the least amount of interest possible. See if you are going to have to pay any fees or premiums on your loan. These are often not counted in the interest rate and make a loan look less expensive and more competitive than it really is. Payday loan companies and cash advance companies are notorious for charging excess fees as well as exorbitant interest rates. Avoid these institutions at all cost. A bank or credit union will certainly be able to offer you better options. Each state has a lending law which states the highest amount a company can charge you interest. In Canada, this rate is 60%. Charging more than a 60% interest rate is illegal, but many companies try to wheedle their way around the law by charging ancillary fees that they do not count with interest. Of late, there has been a rash of lawsuits against such practices. Don’t get involved in the first place. Borrowing your own tax refund Some companies purport to offer you easy access to your tax refund, and will loan you the money in the interim. This practice, like payday loans, is predatory and bad for the consumer. You will lose more of your tax refund than you will see of it, so avoid this scam at all costs. Although borrowing money is a part of regular financial growth, and is often fiscally necessary, you want to avoid being caught in these predatory lending practices. Doing your research is the best way to safeguard yourself against any of these monetary scams. By Morgan James is a financial expert who can help you get financially back on track. Check out all of the information that Morgan has to share on loans (payday loans, mortgages, student loans, and more) at http://www.theguideto-loans.com/