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Once you get to my age, you’ve probably had one or two loans to your name. Well, maybe more than just a few. There’s the student loans (hey there degree I never ended up using…), home loans, not to mention the long-debated ‘We really do need this new car’ loans or the emergency loans from friends or family when life seems determined to kick you while you’re down. Phew!

By this point I’m pretty used to the process, but funnily enough I was actually rejected for my first loan way back when. Well, student loans aide. I’ve learned quite a bit since then, both when it comes to taking out a loan and paying it back, so I thought I’d finally throw a few of those thoughts together for the Frugal Village forum in the hopes that my inane ramblings are useful to someone...maybe :p

Anyways, enough intro-blathering, and onto more loan-blathering!

1. Do a bunch of research, and then do a bunch more
I can’t stress just how important research is, which is probably why it’s at the top of my list. Yeah, it’s going to feel a lot like homework, and yeah, you were probably happy to leave that behind when you left college, but this is probably some of the most important homework you’ll do in your life. This is one time where putting the time in really pays. Literally!

On one occasion I signed on the dotted line and then not a day later found out there were two cheaper options out there, I just hadn’t found them. It’s...not a great feeling, and I had no one to blame but myself. A few percentage point might not seem like much at the start, but trust me, when you’re borrowing a pretty large amount of money over a fairly lengthy period of time, it adds up pretty fast. Like, hundreds if not thousands of dollars fast.

It isn’t all about the rates, either. And this is one area where I consistently fell over early on. Turns out an advert for a low rate can be great, but it can also be a really easy way for lenders to draw you in and keep you blind to some of the crazy terms or conditions attached to their loans. Finding out that an early repayment is going to cost you the big bucks, for example, isn't a great feeling, trust me…

This doesn’t even need to be that difficult, or cost you any money (sorry financial advisers! I’m sure you’re great people). If you’re anything like me, just grab a nice cup of coffee, chuck some music on, and start doing some internet searches. Look for providers in your area, first, and compare the options they have. This is a pretty handy checklist to use: https://nzcubaywide.co.nz/get-a-loan/personal-loans/comparing-personal-loan-providers/ .

From there? Start asking questions, like here at the Frugal Village forum. Chances are, someone has used that provider before. So was it a good or bad experience? How were they to deal with? Any surprises to keep an eye out for? That's the kind of stuff you want (need) to know before you sign the paperwork.

2. Don’t apply for more money than you need
This one took me far too long to learn, but I’m super happy I did. When I was younger, the promise of Big Money was too enticing. For someone who had swarm off credit cards (“Look at me, I’m financially responsible!”), I would use any loan opportunity as a loophole. I knew it, too, I just didn’t really want to acknowledge it.

If we needed 2K for renovations or car repairs? We’d chuck on a little extra ‘just in case’. For what, exactly? I can’t even remember now, which highlights just how unnecessary the extra spending was. What I do remember, though, is us then struggling to make repayments six months later before I’d lost my part-time job.

What I try to do now is define exactly what I need the loan for, set up a budget for it (Mint’s budget template is my favourite. I am in love https://www.mint.com/budgeting-3/monthly-budget-template-track-your-spending-by-month), and then only apply for what I need or know I can pay back. And I still don’t have a credit card, so maybe one day I can consider myself financially responsible? *crosses fingers*

3. Pay it off like your life depends on it
Receiving a lump sum of cash into your account never gets old, and neither does that giddy feeling in your stomach. I have how much in there now?! What some people tend to forget, and I would push this to the back of my mind at times too, is that the often prolonged repayment period stretches far beyond that initial hit of happy hormones. It outlasts it a good few years, in fact.

My partner and I once made the mistake of putting a loan on the backburner, out of sight and out of mind as you might say, only making the minimum repayments and the odd extra payment from work bonuses or lower-than-expected utility bill months. Fair to say, we were pretty shocked when we took stock of our finances a few years later only to find we still had a sizeable chunk of the total still hanging over our heads. Turns out our payments had been covering not much more than the interest.

Nowadays I make repayment my top priority from day one. Any extra money I make, bonuses from work, or other savings I make all go towards my loans, whenever I can, and always on time (I loved Sara Noel’s post on the importance of this: http://www.frugalvillage.com/forums/money-articles/31798-article-8-benefits-paying-bills-time.html). I probably treat them more like credit card bills than I do loans, and it certainly helps. Sometimes a little panic is a good thing when it comes to money :p The sooner I get the weight off my shoulders, the better I feel.
 
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