Taking out a loan

Taking out loans are like any other purchase. I have taken loans out for many reasons. Loans are in general never the first choice. The first choice should always be to save for what you need. Of course there will come a time when you need something you just don’t have the cash for and you have to get a loan… A car… A house or some other large purchase. When you find yourself in this condition, the simple rule is the same rule you apply to the purchase of any commodity. Pay the least you can. Loan fees come in three forms. 1. Initiation fees, 2. points to get a better rate, and 3. the interest you pay. You should always take the second two and average them to an annual interest rate you compare from loan to loan. Pick the loan with the lowest Annual Percentage Rate (APR) Do not be fooled with teaser rates or rates which are not put in terms of the APR. The initiation fees are fees you pay someone to get you a loan or process the paper work. Try to avoid these if at all possible by obtaining the loan yourself.

One final thing it is always good to establish your credit before you need it. Get a credit card, use it slightly and pay it off every month. This process establishes your good credit for when you really need it.