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[H874]How To Borrow Money

by Rita Lowman, Rit

Borrowing money from a bank or lending institution can help one achieve personal and financial opportunities that may not otherwise be feasible. However, without proper knowledge and discipline, borrowing can get a person into trouble. When it comes to borrowing, being an educated consumer may save a lot of headaches and plenty of money.

To ensure access to the best loan rates and credit opportunities, keep these tips in mind:

Pay bills on time.

Late bill payments create creditor concerns. Enlisting handy devices like online bill pay services help keep one's life organized and make bill paying easy.

Be responsible with revolving credit.

Revolving credit is open-ended credit, similar to a basic credit card. This type of credit gives the opportunity to spend whenever more money is needed or desired, as opposed to staying within one's budget. Furthermore, borrowers should be concerned about the sometimes high interest rates attached to revolving credit.

Be prompt in responding to creditors' phone calls.

Responsible borrowers stay in communication with their creditors – especially if they encounter trouble making a payment. It's a good idea to take a proactive approach when it comes to maintaining good credit.

Review credit reports.

Since the U.S. government offers a free annual credit report program, there really isn't any excuse to leave credit reports unchecked.

Be Smart about Debt Consolidation Programs.

With many U.S. consumers carrying significant credit card debt, debt consolidation programs are in high demand. The programs are typically a large loan that pays off other smaller loans. With consolidation, monthly statements and payments are typically reduced. In addition, if strapped for cash, a debt consolidation program may stretch payments out over a longer period of time - decreasing monthly debt payments.

Still, while these programs can be beneficial to borrowers, there are pitfalls to avoid. After all, the reality is that consolidation programs shift debt – they do not eliminate the debt. Borrowers still owe the money and it will have to be paid back sooner or later. One potential pitfall is that borrowers may feel that there is less outstanding debt. For example, a person may notice that credit cards once again have generous amounts of available credit. If this credit is used, it is possible to dig into an even deeper debt hole.

Use loan amortization calculators to plan for success.

A loan amortization calculator is intended to show how a loan will work month-by-month. The calculator helps determine how much interest will be paid over the years, and how much of the balance is paid off at any given time.

An online loan amortization calculator includes an amortization table for reference. After filling in information related to a loan, the calculator tabulates results in a textbox below the loan amortization calculator.

Look further than APR to choose the best loan

Some consumers make the mistake of comparing loans by only looking at the APR. Borrows should keep in mind, however, that not all lenders calculate APR the same way. Some may or may not include all the loan costs. For example, the credit report fee, appraisals fee, and inspection fees may not be included in an APR quote. Furthermore, because various lenders can charge different credit report fees, the APR comparison becomes less valuable. Customer-focused lenders may actually include more fees that accurately reflect a borrower's circumstances, which may make their APR appear higher. Therefore, focusing solely on APR is not the best way to shop for a loan.

Overall, to choose the best loan, it's helpful to look at each lender's quote closely. One should take time to review the rate and closing costs – not just the APR – and note carefully which costs are excluded.

Just like individuals, nations borrow money and just like individuals, they also have to repay their debt along with interest! And why some nations can't borrow money? For the same reasons as individuals their expenses are greater than their income. To meet the gap, the country can print currency, raise debt and cut expenditure. Often a country combines the three to tackle its financial hurdles.

There are primarily three ways that a nation can borrow money;
1. is by issuing bonds internally to its own citizens,

2.is taking a loan from international bodies like the World Bank or the Asian Development Bank etc. and

3.third is by taking loans from other countries.

Most Governments issue Treasury Bonds and other Debt Instruments which essentially means that governments are borrowing on behalf of the country from their citizens. While most of these bonds are issued to cover the expenses of the government in some cases they are issued with some specific purpose like building infrastructure etc. Normally the bonds issued by governments are considered to be the safest way to invest money and so the interest rate given by them is also the lowest. These bonds are bought and sold in the open market and their yields also keep varying.

Then the second source of borrowing for countries is from institutions like the International Monetary Fund or the Asian Development Bank. Here the countries have to specify what the purpose of the funds are going to be and the inspectors from these institutions then visit the country to appraise the project. For example if a particular country wants to borrow money for building a Dam they will approach the international fund. The fund will then send their inspectors to appraise the project, see the viability and the benefits that are going to accrue to the people as a result of the project. They then determine the amount of the loan, tenure and the interest rate. Normally such loans are subsidized as they are normally for good causes.

These types of loans are not given out in lump sums and money is released at different stages of the project and the repayment also normally starts at the end of an alotted time period - say 5 years or so. This provision is kept because the country is seeking the loan precisely because they do not have funds at hand and the project being undertaken is for the benefit of the people. However, this does not mean that interest does not accrue on that amount for that time period. Interest keeps on accruing which has to be paid later.

The third way in which nations borrow money is by borrowing it from other nations. Normally this is also done with some specific purpose in mind and is quite subsidized which means that the interest rates are lower than normal. Nations do this to develop strategic ties with other nations generally to gain some form of economic or military advantage. For instance the US may decide to lend to Pakistan to fight terrorism or India may lend to Bangladesh to tackle floods because it's a neighbor. More than financial aid, when nations lend to each other it's a signal of goodwill and political diplomacy. In political diplomacy there is always give and take and unlike the case of individuals where if one borrows money it is expected to be repaid, here the beneficiary country can repay in other ways as well. While all this is never clearly stated the cases of many debts being written off after a period of time without relationships getting strained is enough evidence to show that the lending country did not really expect to get it back. Other favors can be given in international forums like the WTO for economic reasons or for military reasons by providing a country's airspace and land for having a military base.

These are the three main ways in which nations borrow and lend money to each other or from their own citizens or international agencies. While in some cases they have to borrow to maintain their expenditures at other times, it is to take care of some special needs like an emergency or some other project. You will notice that most of the above behavior is quite similar to individuals and if you think about it, you will be able to find similarities even in your own life. Taken in context, it may help you become a little more creative in you personal dealings.

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Both Rita Lowman & Roy Barker are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Rita Lowman has sinced written about articles on various topics from Finances, Banking and Finances. provides a wide array of personal banking and business banking options and banking solutions tailored to your individual needs. For more. Rita Lowman's top article generates over 1830000 views. to your Favourites.

Roy Barker has sinced written about articles on various topics from Careers and Job Hunting, Fitness and Movie Reviews. Author: Roy Barker. There is more related to loans, finance or small business borrowings at or. Roy Barker's top article generates over 74000 views. to your Favourites.