Adding the Cost of a Loan into Your Budget

At some time, maybe more often than a few times, you’ll need to ‘Take out a Loan”.  It may be a Student Loan for College, a Car Loan, an Equity Loan, a Mortgage  Whatever the type, and whatever the length, before you sign on the dotted line, be very sure the payments fit within your budget.  Know before you sign….because for the next several years, the loan is a legal expense. If it doesn’t fit into your budget easily, don’t sign on the dotted line.

If you default on your loan — by not making payments on time, or missing payments altogether, the lender can – an will – repossess your car if its a car loan, or put your home in foreclosure if its your mortgage.  It is imperative that you know  that you can make all the payments for the length of the loan.

Do you homework — check around for rates.  Obviously, the lower the interest rate, the better. If you have a high Credit Score, you can often get a lower interest rate than advertised.  Ask if  should you decide to ‘Prepay’ your loan, you won’t be penalized.  Prepaying means either making extra payments, or paying the loan off completely before the maturity date…a good thing on your part, but some lenders don’t allow that. Once the loan begins, it is imperative that you make your payments as specified within the loan, and make those payments before the due date.  This means you stay in good standing with not only the loan company, but it is a direct link to your Credit Score.

Keep any loan documents in a safe place, and most especially, the final one that says it’s fully paid off….keep the last one indefinitely.