Taking out a loan is a serious commitmment. Unfortunately, for many people it is a decision that often has to be taken at a time of stress, weakness or pressure. Sometimes the determination to get the loan causes sense and good judgement to go out of the window.
Loans are usually for large amounts of money and repayment periods are calculated in years not months. Both are reasons for you to reflect before borrowing money. Luckily the law protects borrowers from reputable lenders such as those found on this website. You can apply for a loan without committing yourself to accepting it if it is offered to you. Even if you sign up for the loan, the credit regulations provide you with a "cooling-off period" during which you may back-out of the loan. So, if you want to see how much you may borrow and what the repayment amount and period will be feel free to click the links on this site and fill out the simple online cerdit application forms.

"But I have to borrow money and the above safeguards are great but what other advice should I heed if I've applied and been accepted and I want to sign up for the loan?"

• Independent advice: Get some advice before finally committing to the loan. Many ordinary people feel awkward asking for advice, like it is a sign of weakness. Others don't want to have to admit that they are in financial need to people they know. However, there are many sources of advice, one of which should be available to most people.
  • Don't forget parents, family and friends can be a great source of free advice
  • Internet sites exist that offer free monetary advice
  • Organizations such as the Citizens Advice Bureaux have qualified debt counsellors
  • Solicitors can give 30 miutes of advice for a nominal fee under the Legal Aid scheme
  • Public bodies such as Trading Standards produce leaflets to advise you of your rights when taking on board credit obligations, such as a personal loan.
  • You may be wise to pay for advice if the sum borrowed is large or the repayment period is long. Advice can come from Accountants, Solicitors or Independent Financial Advisors (IFAs). You must certainly get advice if the loan is secured on your home i.e. it's a mortgage.
• Work out your budget: Either on your own or in conjunction with one of the sources of advice listed above, work out a family budget. This will show you how much spare money you have remaining each week or month, from which you can facilitate the proposed loan i.e pay back the new borrowings. It is essential you do this, because if you take on repayments that are higher than your remaining free money you will be unable to keep up repayments on the new loan, and you'll fail in arrears on the loan.
• Look to the future: This is difficult but essential to consider. Look at all aspects of your life and try to imagine what changes may occur during the lifetime of the proposed loan. If the loan is only for 12 months it's easy but if the loan is, for example, over five years it is more difficult. What am I getting at? Here are some examples:
  • How safe is my job? How secure is the future of the company I work for? Is my partner's job safe? Losing a job and being unemployed or unable to find a similarly paid job in your locality will adversely affect your ability to repay the loan.
  • Do I want to start a family in the future? Can we repay the loan if only one of us works? What are child-minding costs if we go back to work? Child rearing costs are substantial and on-going and should not be under-estimated.
  • What other major costs may occur during the period I am paying back the loan? Will I need to replace the car? Can I afford a family holiday? What if there is a major problem with the house, it's plumbing, or say the roof? If you own a home rather than being a tenant you must consider budgeting for maintence of your home during the loan period.

Hopefully, you'll have been given some food for thought by this article. If you need further advice we have a page of links to useful sources of advice on the Internet. The purpose of this article is to simply make you more aware of the obligations you are taking on when borrowing money rather than to put you off borrowing at all! However, for some people not taking out the loan may be the right choice, it is for you to decide. All we're saying is give it some thought, and don't let your deisire to get your hands on the money blind you to your future repayment obligations.

Christopher Hudson - 11th March, 2008