The credit crunch has eased worldwide, and banks now seem more willing to lend you some money. Locally a lot of banks are in fact, aggressively wooing consumer and business loans, with attractive fixed and close to zero percent interest rates.
Although business maybe picking up, and you are noticing that your customers are buying bigger portions (if your business is a restaurant) and you have had to replenish your stock more often in order to meet consumer demands (if yours is a retail business), be wary about snapping up loans, presumably to raise capital and expand your business.
Before signing up for the loan, scrutinize every line of the loan agreement, go through the entire document several times, and read and understand the fine print very carefully. Aside from these broad admonitions, here are eight other ways to ward off loan sharks and predatory lending.
1. Compare the loan rates of different lenders.
Look into the annual loan interest rates of different lenders. Choose the rate that’s most advantageous to you.
2. Clarify the terms of the loan.
Don’t be shy to ask questions. After all, you’ll be signing away a huge chunk of your monthly income; you deserve to know where it will go.
3. Read the entire loan contract three times and take special care to go over the fine print.
If the fine print is too small, use a magnifying glass. Don’t be afraid to look odd or overcautious in the presence of your loan officer.
4. Have your own lawyer or financial consultant interpret the entire contract for you.
Don’t rely on your loan officer’s interpretation; neither should you rely on “experts” provided by the loan company.