Smart Borrowing Tips That Make Using Credit Smarter Easier

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Q: I switched from an undergraduate degree at a university to a two-year diploma program at a vocational school. But my course load in college was flexible. I lost it in my diploma program. This is a full-time course with a lot of homework. I’m short on cash because I had to work less hours to maintain my grades. I’m wondering if I should take out a student loan. Credit card credit limits were recently approved, so that helps too.What should I consider before applying for a loan? ~Ethan

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A: Furthering your education and making sure you have marketable skills when you finish is a smart move. There are many ways to achieve your educational and career goals You seem to be thinking about However, we encourage you to expand your plan to include smart financial choices. has a direct impact on the decade of

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Borrowing money is a big decision. This includes researching interest rates, choosing the right product and lender, and signing legal agreements with terms that will serve you now and in the long term. Debt can be good or bad. It’s supposed to be, but we all know what they say about being too good!

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Here are some things to keep in mind when deciding to borrow:

determine the amount payable

Important things to consider when applying for a loan Consider your budgetIf you haven’t outlined your budget, that should be step one. Before talking to a lender, you need to know where you stand and whether you can afford to pay more. Lenders calculate how much you can lend based on your gross income (before taxes). This is very different from balancing gross expenses and net (after tax) income.

Student loans are unique. No payment is required while you are in school. This will give you the leeway to take out a loan at first, but will make it invisible to face after you leave school.Payouts can be substantial if you use student loan To fund not only your education, but your lifestyle.

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determine how much you need to borrow

Decide for yourself how much you need or want to borrow before talking to a lender. Borrowing as much as friends, family, or co-workers is not a useful measure. Unless they are paying for you, borrow as much as your budget realistically allows.

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Clarify what you need money for

Part of deciding how much to borrow comes down to deciding what you need the money for. If you need money for certain purchases, such as a laptop, and if you need help with living expenses, such as courses in a two-year program, you can easily determine how much you need. However, please use the budget as a guideline. This is also the best way to determine your monthly shortfall if you need small amounts of money over a period of time.

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Credit comes at a cost, so if you’re short on cash each month, consider whether there are other options to fill the gap before considering student loans or supplementing your income with credit cards. Please. Can I cut back on my spending temporarily? Could I possibly get a roommate or sell my car to eliminate monthly mortgage payments? Work at a restaurant and get a discount Can you afford a portion of your diet? Managing our finances and balancing our budgets always comes down to a series of small decisions. Please adjust accordingly.

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Find the best way to borrow what you need

Borrowing wisely and using credit wisely are related but not the same thing. Find the right product, lender, interest rate and terms before taking out a loan, credit card, cell phone contract, mortgage, student loan or any other form of credit. Some of the research can be done online, but it’s important to talk to different lenders to fully understand your options.

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What do lenders look for when applying for credit?

With some forms of credit, you are borrowing a specific amount and are required to make certain payments over the life of the loan. Car loans and mortgages also work this way. Other forms of credit are accepted up to certain limits. Credit cards and lines of credit work this way. You are responsible for paying only for the portion you use. You may pay less at first, but the temptation to spend up to the limit increases. This is where borrowing wisely and using the credit you are given wisely collides.

The smart way to borrow money

Some forms of credit, such as student loans and mortgages, can initially seem like good, smart borrowing choices. However, overextending yourself can exacerbate even value- and wealth-creating debt. Non-profit credit agencies in your areaThey will take the necessary steps to borrow wisely, use your credit wisely, and know what you will face when it comes time to pay and are happy to help. will be happy to help get you back on track.

Related reading:

5 Warning Signs You Have Too Much Debt

Do I lose money if I don’t have a credit card?

Top 5 things young people and graduates can do for their finances

Scott Hannah is president of the nonprofit Credit Counseling Society. For more information on managing your money and debt, please contact Scott. e-mailcheck nomoredebts.org Or call us at 1-888-527-8999.