How to Avoid Getting a Bad Bank Loan
Our financial environment is in a state of constant flux. Changing market conditions and constant passing of new regulations and repealing of old ones makes for a lot of confusion out there.
We have been told after the last big recession that measures are in place to protect consumers against the kind of “predatory” loans that caused many people to lose their homes in 2008 and 2009. This is indeed partially true, but it would be foolish to think these measures could ever be 100% effective. The best weapon against this kind of financial exploitation is still to be properly informed.
Don’t Take Words at Initial Value:
There are indeed institutions out there founded on ethically sound principles, and ran by people who take them seriously, but unfortunately, many are the exact opposite of such: they will try and trick you with words. When it comes to a major loan, this is one time where you shouldn’t be afraid to read the fine print, which brings us right to our next point:
Take Your Time:
One tactic of unethical lenders is to try and rush you into a hasty decision. Never let them do this! Don’t be afraid of taking as much time as necessary to absolutely understand fully the terms of your loan. Don’t be afraid to research concepts and study them until you almost become an expert in them. The knowledge you will gain will last a lifetime.
Be Financially Literate:
What is financial literacy? Financial literacy is the understanding of financial areas, how they work and how they affect you personally. I think by now you can see how important it is. Most of us think we know more than we really do about how finances really work, even the bare basics. Unless you work in the industry, your knowledge is probably incomplete and quite possibly out of date. This is another common error, forgetting how quickly things might have changed on you.
In recent years, even the US federal government has recognized the importance of educating the public on the basics of financal literacy, and with the help of knowledgeable people who care about this issue, has instituted free programs to that end. It is estimated that a whopping 63% of the population of the United States of America is to some degree financially illiterate. Fortunately, with the help of these programs and other measures taken by people of conscience who are in a position to help, things are expected to start turning around.
One key element of success is to actually plan for it. This sounds so blatantly obvious when you read these words, but the trick is to actually implement it in real life. It doesn’t matter even if the first time you fall way short of these goals. You can adjust, pick back up, and carry on. You can start with a small goal and then start shooting for bigger and bigger goals. In fact, you WILL do just that if you make it a habit. The key is to be mindful of it, not just from time to time, but on an actual real day to day basis. This means first and foremost to check your progress daily.
If you are one of the people reading this that could use further financial education, please sure to take advantage of the numerous (mostly free) resources out there. A little time and effort invested today can make a big difference down the road. The good news is that once you get on top of your finances, it gets easier and easier to get ahead.