Taking out your first loan can feel daunting, but with the right approach, it doesn’t have to be. Whether you’re applying for a personal loan, car loan, or home loan, it pays to be prepared. Here are Ben Blacker’s top tips for first-time borrowers looking to make a smart financial decision.
1. Know Your Budget Inside and Out
Before borrowing a cent, understand exactly how much you can afford to repay each month. Use online loan calculators to work out realistic repayments based on different loan amounts and interest rates.
2. Don’t Borrow More Than You Need
It can be tempting to borrow extra “just in case”, but you’ll end up paying more in interest. Be clear on the purpose of your loan and borrow only what’s necessary.
3. Check (and Improve) Your Credit Score
Your credit score impacts both your eligibility and the interest rate you’re offered.
- Check your credit report for free via Equifax or Experian.
- Pay off any outstanding debts or defaults.
- Keep credit card usage below 30% of your limit.
4. Understand the Loan Terms
Read the fine print and make sure you understand:
- Interest rates (fixed or variable)
- Fees and charges (establishment, monthly, early exit)
- Loan term and repayment frequency
- Whether it’s secured or unsecured
5. Compare Loans, Not Just Lenders
Use platforms like Canstar, Finder, and RateCity to compare:
- Interest rates
- Comparison rates
- Flexibility (early repayments, redraw facilities)
6. Don’t Be Afraid to Ask Questions
A good lender or broker should be happy to explain the details in plain English. Don’t feel rushed — ask about anything that’s unclear.
7. Think Long-Term
Look beyond just monthly repayments. Ask yourself:
- How long will this loan take to repay?
- What’s the total cost over time?
- Can I increase repayments to pay it off faster?
Final Thoughts
Being a first-time borrower doesn’t mean you have to go it alone. With some planning, smart questions, and the support of a finance expert like Ben Blacker, you’ll be well on your way to borrowing with confidence and control.
