By Jasmin Brown

BDO Debt Solutions

Credit and Borrowing

Jun 3, 2022 | 9:17 AM

“The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Pattison Media and this site.”

Are you considering borrowing money?

If so, you want to do so responsibly, and you want to understand the type of credit you are obtaining. Whether this is the first time you have filled out an application, or if you have done it before, there are things that you should consider ahead of time. It is in your best interests to be informed and avoid making poor decisions when it comes to borrowing money.

What information will you need?

When filling out an application or meeting with your bank, you should have certain information available ahead of time:

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· Your net monthly income and your household income

· Details of your assets and their approximate values

· A list of your monthly expenses

· Any other loans or debts that you have and the outstanding balance

· Your net worth, which is the value of your assets less your debt

What to do before borrowing

When borrowing money, you will want to ensure that you do it right to avoid putting yourself in a difficult financial situation. Below are some tips for keeping the experience positive:

· Make a plan before any major purchase

· Determine how much money you will need, and borrow only that amount

· Borrow only what you are able to afford

· Allow time before you actually need the credit for the application to be processed

· Do your research and look around for the best rates

· Ensure that you read and fully understand the application and terms attached to the credit facility before signing documents

Types of Credit

Some of the more common types of credit include the following:

· Personal Line of Credit – may be unsecured or secured (attached to an asset) with a set credit limit

· Personal/Consumer Loans – term, repayment, and interest rates vary

· Home Equity Financing – attaches to your house. The more equity you have, the more you can borrow. Consider this carefully, as it could affect your home.

· Conditional Sale Contract – purchaser receives possession of and right to use the goods (often a vehicle), but tile remains with the seller until the buyer has paid the purchase price in full

· Leasing – similar to a long-term rental. At the end of the term, you don’t own the goods, however, most leases have an option to buy out the remaining value.

· Credit Cards – interest rates may vary, may require an annual fee, and some offer loyalty points.

When done responsibly, borrowing can actually help you to create a good credit history and assist you in reaching your financial goals. However, when done irresponsibly, things can quickly get out of control and you can damage your credit score. The good news is that there is help available if you are in need of a fresh financial start.

If you are having trouble making ends meet each month, finding the right debt solution can help. Visit the BDO Debt Solutions website for more information about bankruptcy, or call 1 855 BDO DEBT to book a free, no obligation consultation.

Jasmin Brown is a Senior Vice President overseeing the insolvency practice in Saskatchewan. She is committed to providing creative and practical debt solutions with empathy, understanding and professionalism to help people overcome their financial difficulties.