Understand your needs

What do you need the loan for? Is it for a need or a want? Is there a financial product or service out there that will best suit your needs? How much do you need to borrow? Although you may be offered to do so, you do not need to borrow to the maximum amount.

Shop around

Make sure you shop at different banks to see what they can offer. Does Bank A offer a better rate than Bank B? Are there more benefits to Bank C’s package? Find the best deal for you!

Only borrow from licensed financial institutions

There are many dangers associated with borrowing from an unlicensed moneylender (e.g., a loan shark). Common practices of a loan shark include charging an extremely high interest rate, holding your ATM card indefinitely, as well as using aggressive tactics to recover the debt.

Read and understand the terms and conditions of your credit facility

It is especially important for you to read the fine print - and never sign an agreement blindly! It is important for you to understand your responsibilities and understand all fees you may be charged.

Do not be afraid to ask questions

If you do not understand an aspect of the loan/financing, you have the right to ask the sales agent to explain it clearly to you until you do. Remember, never get yourself into something that you do not fully understand! Ask your bank to disclose or be transparent about any hidden fees.

Be a responsible and creditworthy consumer

Always pay your loans on time, and in full.

The consequences of not paying your loans on time, nor in full may include:

• Being charged a late payment fee and this will be included in your billing statement. You will be charged this fee for every month your payment is late.
• Increased balance due to to the effect of compounding interest. There have been cases of individuals “forgetting” about their credit card bills, and then incurring charges resulting in the balance shooting up to tens of thousands of dollars.
• Record of bad payment history in your credit report.
• Future loan/financing applications may be jeopardized, e.g. you may be charged at a higher interest rates for a loan, and bargaining for better rates will be extremely difficult because you have an episode of non-payment.

Keep your documents safe!

Your documents contain vital information on your credit facility. Make sure they are kept in a safe place, in case they are needed in the future.