Borrowing guide
A loan should solve a problem, not start a new one. Use this checklist before you request, and again before you sign anything.
1. Check the payment fits
Add up your take-home pay and fixed bills. The new monthly payment should leave room for groceries, transport and a small buffer. If it only works when everything goes right, choose a smaller amount or a different option.
2. Compare total cost, not just the payment
Stretching a loan over more months makes each payment smaller but adds interest. Look at the "total of payments" line on every offer and compare it with what you would pay another way.
3. Read these four lines in the agreement
- APR and finance charge
- Number, amount and dates of payments
- Late fee and returned-payment fee
- Whether paying early saves interest
4. Know your rights
The Equal Credit Opportunity Act bars lenders from discriminating based on race, color, religion, national origin, sex, marital status, age or receipt of public assistance. If you are turned down, you can ask the lender why. Debt collectors must follow the Fair Debt Collection Practices Act. You can file a complaint with the CFPB at consumerfinance.gov.
Red flags: walk away if you see these
- Anyone asking for a fee, gift card or wire transfer before you get a loan
- "Guaranteed approval" or "no credit check, no questions"
- Pressure to sign today before you read the terms
- A lender with no license information for your state
Other options worth a look
Before borrowing, ask your creditor or provider for a payment plan, check whether a local credit union offers a small personal loan, or contact a nonprofit credit counselor through the National Foundation for Credit Counseling (nfcc.org) for free budgeting help.
See what a monthly plan could look like for you
One free request. You decide whether any offer is right for you.