When we are providing our clients with financial planning services from our Perth office, one of the more important aspects is the ability to borrow money for a home, a car or other needs. This piece is one in a series we are doing where we give you a shortened, easy to read version of what ASIC has to say about various aspects of household finance.
All information provided here is general and compliant with ASIC regulations.
Can You Afford to Borrow?
ASIC advocates making sure that you can afford repayments before taking out any loan and they recommend the following questions.*
What am I Borrowing This Money For?
Is it to pay bills or debt? Is it to help friends or family? Is it something you really need or is it something you just want?*
Is Borrowing the Best Choice?
Do you have any option that doesn’t involve borrowing? Can you save for the item and pay cash? Can you put it on layaway and pay it off later?*
Have I Checked My Credit?
ASIC advises getting a free copy of your credit report. Lenders use your credit report to assess your ability to repay any loan. This determines the terms, interest and whether or not they choose to extend credit to you.*
Can I Afford Repayments?
ASIC recommends figuring out how much the repayments will be and trying to live without that money for a few months. You will get a great idea of whether or not you can repay your loan during that time.*
Is the Timing Right for a Loan?
What do you plan on doing over the period of the loan? Is your job secure? Do you plan to go to school or take a trip? Do you have any health issues that could affect your ability to earn in the near future? ASIC recommends paying close attention to timing.*
To learn more, call Approved Financial Planners today: 08 6462 0888.
*ASIC, MoneySmart. “Borrowing basics.”