There are not many words whose meaning for different people varies as much as the meaning of the word 'borrowing'. For some people, it means lack of money, limited options and dependence on the lender. Others see borrowing as the way to realise their dreams or associate it with a goal for which they have already started saving money.

What should you consider before taking a loan?

Before you take a loan, ask yourself the following questions:

  • Is my income sufficient and stable in the long term so I can service the loan?
  • Is there enough money for loan repayments in my family's budget?
  • Do I actually need the thing I intend to buy with the loan?
  • Maybe it would be more sensible to try and save the money I need or save at least half the amount and borrow the other half?
  • How much interest will I actually have to pay? Read the loan agreement carefully. Look into the different options of borrowing and compare offers by asking all lenders about their annual percentage rates.
  • What do I have to give up to afford the monthly loan repayments?
  • If I take this loan now, does it mean that I will deprive myself of the possibility to borrow for something more important, like a home, in the future?
  • If you are looking to buy a home, you should first ask the bank for an estimate of the amount it would lend you.

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