How to Be a Smart Borrower

Entering the world of lending can be an intimidating process, particularly for someone who is trying to sustain an excellent credit score or working to improve a not-so-great score. When searching for a West Virginia car loan, be sure to follow these tips – they will service you well not only in this loan-application process, but throughout your life as a borrower.

Borrow only what you can afford: It might sound simple to say, but this is a critical rule to follow. Borrowing beyond your comfort zone can be extremely tempting – particularly when the option of a nicer car with more features is on the table. But borrowing more than you can afford puts you in a difficult position. It can be difficult to repay your debts on time. Your money will go to debt instead of savings. And your purchases ultimately will cost you far more than you were prepared to handle.
Understand your financial situation: Be honest with yourself and make a deliberate assessment of your finances. How much do you make? How much do you owe? How much do you save? Bu understanding these factors, you also can examine your comfort level with taking on more debt.
Know your credit score: Borrowers with stellar credit scores will receive preferable loan programs and interest rates. Conversely, those with less than stellar credit histories will be offered programs with higher interest rates. By knowing your credit score and monitoring it over time, you'll discover the factors that help you and those that can lower your score. Always keep an eye out for errors in your credit report, and be sure to notify credit bureaus in the event of an error. Mistakes could affect your score.
Keep records of your transactions: File all your paperwork, whether it's a credit card statement or your monthly auto loan statement. Record the amount you pay and the date. This sets up a pattern of responsible borrowing and money management – and also puts you in the position of power in the event that your company makes a clerical error in crediting your payments.
Whenever possible, pay a little extra: If your loan has no prepayment penalty, you can watch your balance disappear by applying small payments to your loan. For example, if you take out a $15,000 car loan for five years at 7.5 percent interest, your monthly payment is approximately $300. But if you can afford a $325 monthly payment, you will shorten the term of your loan by almost six months! That means you'll own your car faster – and will save money on interest in the process!
Always pay your bills on time: No matter what, always pay your bills by the due date. Always. Forgetting a payment or just ignoring one because money was tight can affect you for years to come. Your lenders will report your payment habits to credit agencies – so forgetting to pay your car loan a few times could cause headaches when it comes time to get your next auto loan. If you're unable to make a payment, call your lender immediately. Borrowers who have a strong repayment record can find that lenders and creditors will work with them to stay on schedule.

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