Loans, whether for personal use or for the payment of debt, may be required. After all, who has never wanted to buy a nice car, buy high-tech equipment or enjoy a pleasant stay by the sea without the means? However, if you decide to borrow, there are pitfalls to know and avoid if you want to get the best return for your money. Here are the top five.

Borrow more than you need

Given the possibilities offered by consumer credit, it is often tempting to borrow a large sum for all kinds of pleasure expenses. The question to ask is: is it really essential or even useful? To avoid over-indebtedness for trifles, be careful! Of course, you are free to use the consumer loan at your leisure (especially when you take out a credit without proof ), but you will have to return every penny that the bank will pay into your account along with the fees and interest.

Jump on the first comer

Different lenders charge different fees, so do not bet on the first lender you find. Do an online search before making your choice. By comparing the credit companies , you will find one that will be willing to lend you the required amount in flexible and affordable terms. For this, simply fill out an online form. This procedure is free of charge and without commitment or documentation to provide. Once the fields are filled and the loan simulation is complete, the comparator will present you several loan offers that may interest you.

Do not understand the terms and conditions

Borrowing money is a serious commitment and you should try to familiarize yourself with the terms and conditions of the loan to avoid unpleasant surprises after signing your contract. Be wary of the finer details that are usually written in fine print, such as the repayment term, fees, interest rate.

Neglecting prepayment penalties

Some lenders do not charge prepayment penalties, so you should be able to avoid them. Make sure to check if there are any before you take out the loan. Their existence can seriously increase the total cost of your credit so stay well informed on regarding consumer credit underwriting and loan buyback procedures before entering into a contract.

Take a bad insurance

Many personal loan providers will try to add an insurance sales pitch at the end of a loan validation. The two most common types of insurance are life insurance and unemployment insurance. To protect your family, you should think of a life insurance policy that covers not only your personal loan, but all your needs. Unemployment insurance could be a little more convincing. But you have to do the calculations. How much does it cost per month? As long as you do not have a high risk of losing your job in the next 6 to 12 months, it’s almost always better to save money (rather than paying the premium).