5 key things to consider before taking credit in these trying times

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Taking on credit in tough economic times might seem like a financial decision to steer clear of. However, credit taken for the right reasons and in a responsible manner can assist you in bettering your life. lockdown credit

Before approaching a bank to apply for credit, you should have a clear idea of what you need it for. When you know why you are borrowing, you can choose the right credit product for your needs and apply for an amount that matches the expense. If you find that you are no longer able to live within your budget, the first port of call is to review your budget and spending and cut expenses.

Responsible lenders will always caution against taking out any form of credit to pay for other credit repayments – using credit to service credit can easily spiral into debt levels that become unmanageable. Instead, go back to your budget and tighten your financial belt or consider switching your credit into a single loan to simplify your repayments and potentially free up cash flow.Different types of credit have different fee structures.

Consumers are encouraged to make sure that they understand the interest rates applicable to the credit they take up as well as the part that interest plays in the full cost of credit.Before signing any credit agreement, it is highly advisable for consumers to ask questions, and understand what they are committing themselves to. Ideally, you want to choose credit that can offer you the lowest possible interest rate at a repayment term that you can manage.

 

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