You should know that loan is dangerous
A loan sometimes helps some people that need something like things, car, computer, book, etc. Some people could not pay cash for expensive things because their salary is low.
I think we should not think about loan today because we are hard to return the loan. The employee cuts so many jobs. Perhaps we suffer firing too. Of course, the unemployment needs to open a business for their live. Unfortunately, some unemployment use loan because they have no fund.
You should know some information before ask a loan to others. The information is useful to avoid you from bankrupt. The information is:
You should know what is the purpose of loan
You should know why you loan to others. Some people use loan for needs like education, house, car, furniture, etc. People must need house for staying, car for transport, college for future. Unfortunately, most people has limited money.
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Do not use loan for unnecessary thing like buying a Jaguar, buying a bungalow, etc. You should use a loan for productive things like open a business. Make sure the business could give you return so you can pay the loan.
The global crisis make your salary is decreasing. Our ability to buy anything is also decreasing.
You should know that you can pay the loan
You could measure your ability of paying the loan. If you feel hard to pay the loan, you should not ask the loan. A bank will help you to determine the ability paying the loan. They will survey your financial health with notifying your salary, assets, family, child, etc. For example, your asset is only $10,000. The bank will not lend you for $ 20,000.
If you have no ability to pay the loan, the bank will not give you any loan and reversely. A bank is a profitable oriented company so they will not give you charity.
You should know what (who) is the creditor
Some creditor asks your guarantee like house, car, land, and other fixed assets. They will seize your asset, if you cannot pay the loan. Bank and other financial institution are selective to give the loan.
Besides bank and financial institution, you can ask loan to people. You can ask people around you like parent, family, friend, etc. They may be kind creditors. Most of people will not charge you with interest and other cost. Some people offer you with soft loan that does not ask you with interest and cost. My Grandpa said that some people give you soft loan without returning obligation. You can return, if you could get the profit.
Borrowing with people is sometimes easy. If you could not pay the loan, you will break the friendship and fellowship.
What is the loan
Financial institution offers various loans like personal loan, secured loan, unsecured loans, mortgages, auto loan, equity loan, etc. the loans has different characteristics each other. Mortgages is for the borrower who need house, auto loan is for the borrower who need auto, etc. we cannot use auto loan for house financing and reversely. The types of loan i.e:
Mortgage loans: a loan for buying house or building
Personal loan: a loan for buying something
Auto loan: a loan for buying car
You should check what loan that fits on your needs. You had better ask soft loan to the financial institution. It will light your loan payment.
The cost of loan
You should consider the cost of loan. Some financial institution set high interest for your loan. The higher loan will make you difficult to pay it. If you postpone the payment, the interest will grow over many times.
Financial institution also provides fixed rates and floating rates. A Fixed rate is the rates that set stable for example 4 % a year. The financial institution usually set higher interest to fixed rate than the floating rates. A common people think that fixed rate is cheap than the floating rate. In reality, fixed rate could be a cheap cost, if the Fed rate is down.
Besides interest, you must pay some fees like origination fee, administration fee, underwriting fee, appraisal fee, credit report fees, and processing fees.