In your financial journey, you may find yourself in need to borrow to make a fruitful or viable investment. You may also find it needful to borrow to meet another need in your life. Do not shy away from borrowing when there is a justification and so long as you utilize the borrowed funds for the intended purpose. Here are some considerations to make before borrowing: 

• Determine the purpose for which the loan is sought. 

What is the loan for? Is it a legal purpose? Is it a moral purpose? Do you have a personal justification to take out the debt? 

• Consider the loan repayment details.

What is the source of your income? Is your loan repayment going to come from your salary or your business income? Is that income adequate to cover your living expenses and pay the loan? How sustainable is that source of loan repayment?

• Establish whether security or collateral is required for your loan, and if it is, find out what security or collateral is required. 

This helps you determine whether to proceed to borrow based on the value of the security sought against the need or purpose for the loan. 

• Consider who your creditor is. 

Different creditors have different credit offerings. The cost, accessibility, terms and requirements vary for different creditors. Do your due diligence to identify the creditor that perfectly suits your borrowing need. 

• Consider the term or period of the loan that you intend to take.

When taking out a debt, consider the length of time within which you are supposed to repay the loan. Is it a long-term loan or is it a short-term loan? The length of time it takes to repay a debt has a direct effect on the total cost of the loan in the long run.

• Consider the terms of interest for the loan. 

What is the interest rate? What is the interest accrual and repayment cycle or frequency? What is the regime of the interest? How and when is the accrued loan interest payable? 

• Consider the other incidental costs attendant to the loan. 

When you are borrowing, be aware that there are other costs that come with the borrowing. Such other costs include but are not limited to: commitment or negotiation or appraisal fees; legal fees; valuation fees; survey fees; insurance fees; government fees like stamp duty, registration fees, search fees, land rents, council rates & registration fees. These costs may significantly change the cost of your loan.