Advice Before You Borrow

What’s the best advice you got before getting a loan?  Asked on Social Media forum 2/22/2019

My advice is to understand it’s a loan.  It’s not a gift or a favor and comes with a price tag.  I have seen far too many clients in my credit restoration business who have not understood the true costs of borrowing money.  They only  understand the ramifications after they have defaulted on their agreed upon obligations.  Kind of like a kid who ate too much candy and got a stomach ache.  These are all good people, but just did not calculate or understand what they were getting into.  

Lenders are always eager to get loan business and then often run people thru the ringer to get the actual loan approved because they don’t actually control the approval process itself.  Loan approvals are done in the back room by the underwriters (the Real decision makers ).  Their actual job is to market for loans and then gather the needed paperwork, signatures etc.. as per the underwriter’s needs.  Over the years I have noticed that there is much focus on the approval process, but not much in regard to financial education and budgeting for the consumer.  Most loans are also not explained in layman terms and buyers are rushed through the loan and signing process.  Proof of this is in the focus of their advertising, words such as quick and easy… describe why their services are the best.  In my opinion, the focus should be on what you are signing.  Truthfully though, because of the amount of legal paperwork required to attain a loan, it would take hours if not days to walk a loan recipient thru a full explanation of what they are signing and agreeing to. 

The question that you  should ask in advance of any loan, is what will be the TOTAL COST of this loan?  Fees, interest, possible penalties etc.,  if more people did ask that question then there would be a lot less debt in this country.  Often many costs are buried and hard decipher.   Even online companies such as Pay Pal and eBay seem to hide their fees pretty well and they aren’t even real lenders.  Yes,  I can tell you first hand that I have never seen so much money being fleeced from my accounts as when dealing with those two giants of the Internet.  I am sure I must have agreed to it somewhere along the line.  LOL  Loans are the same.  My advice is to be curious and ask a lot of questions.  Remember that in the end it’s your money that is at stake, not to mention your credit.  In my opinion  any large loan that a person may consider should be treated as a marriage proposal, with careful consideration and purpose. 

Here are couple examples to illustrate my point… 

The average 60-month car loan ( about 25,000 ) incurs about $3,000 in interest alone, that does not include taxes, fees, and other misc. charges, and that’s with decent credit.  With bad credit?  It is closer to $9,000 in interest alone.  So when you buy a car, for example, you need to take the purchase cost as well as all the attached costs into consideration.   Interest, taxes, fees, loan insurance etc .. are generally all part of the deal.  Although, this may seem obvious, most people do not take the time to really understand the details.

In another example, a  $200,000 home purchase on a 30 year fixed rate loan, you will end up paying around $380,000 for the loan itself.  This does not include other costs of purchasing the home.  With bad credit, your costs really skyrocket.

Again this is your money, so look at all loans with your eyes wide open.   Pay attention to the bottom line total cost to you and your family.  I guarantee that you will then empathize when you hear someone say, ‘I should have been a banker’!  LOL   

If you have questions, please feel free to contact me at the numbers or links below.              Attila

Attila J. Thiry, Business Development & CEO  |  NATIONAL CREDIT RESOURCES

PH (844) 462-5700 or (844) GOAL700   |  DIRECT (253) 227-2809  

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