Tips for borrowing wisely.

Understand your rights and obligations: Know your rights and obligations as this will ensure that you make the right decisions. More importantly know your options and where to go in case problems arise.

Borrow within your means: Only borrow what you can afford and try as much as possible to borrow for essential things like a house, a car, small business, education etc.

Make your payments on time and in full: You may think missing a payment is not a big deal, but doing so without the lender’s permission will negatively impact your credit rating and you could pay more interest in the long run.

Understand how much interest you will pay: The amount of the loan and the time you take to repay the loan will have a big impact on how much you’ll spend over the life of the loan. Make sure you understand how interest is calculated and what the loan will cost you after all other fees and charges are included.

Be aware of all the fees: Lenders can charge you a range of fees including up-front initiation, and monthly service fees. Credit cards may charge annual fees and additional fees for certain transactions, so find out what costs you will be paying and factor this into your budget. If credit life insurance is included ensure that it is reasonable, that you have the policy document and you understand the claims conditions and procedure.

Shop around: Credit costs money, so compare different interest rates from different lenders. In addition to ensuring that the interest rate you are charged is legal; also check the terms of the loan and the period over which you will pay it back.

Read the small print: Don’t feel pressurised into signing a loan agreement without taking the time to understand the conditions. It’s also your right to ask an independent person to explain the terms to you in the contract before you sign.

Never sign blank forms: When taking out a loan, never agree to sign blank forms for “future use”. Unscrupulous lenders use these forms to get Garnishee orders as often these are consent forms.