Getting a loan is not always as easy as it seems. St times, borrowers land in a bad loan deal with high APR and other added disadvantages just because they did not shop for loans properly. Sometimes, the lenders trap the customers as well. And before the customer realizes this, he had already signed the loan deal.



Before taking any loan, especially a secured loan (for which you have to risk your home), make sure that the lender is not charging you unreasonable APR and charges. You need to take precautions if the lender -

- Encourages you to borrow more than you need

- Does not disclose the APR, rescission rights, other fess and penalties in written

- Urges you to go for credit cards and other form of debts along with the main loan

- Ends up producing a totally different loan product than that he offered you initially

- Pushes you to accept payment terms that you can't realistically meet.

- Asks you to sign blank forms. ("It'll speed things up. We'll fill in the blanks later, trust me.")

- Denies you copies of documents you signed.

If any one or more things is happening to you you better compare loans extensively before signing any deal. While comparing loans, following are the major points the borrower should keep in mind.

- APR- Ask the exact APR rather than the nominal rate that is offered to you since APR (annual percentage rate) is at what you'll be paying your interest on.

- The monthly payments- Compare loans on the basis of monthly payments as well. Ask the lender whether you installments be fixed or variable.

- Prepayment penalties- Also known as early redemption charges, the lender charges you this if you repay the loan before its maturity date. Be very sure how much the lender will charge you? It is usually 2% of the total loan amount but bargain if you can.

The only way to play safe is compare loans. With increasing competition among the lenders, its better for the borrower to take help of trusteed financial advisors, or attorney before signing any loan deal.