Following are some of the points one should keep in mind before taking loans.

1)Get the background info- The foremost thing is to decide whether you want to avail an unsecured loan or a secured loan. Secured loans need the borrower to pledge any of his assets like home as collateral. Though these loans attract low interest rates, the lender can repossess the home at stake, if the borrower defaults on the loan repayment. If you need hefty amounts at low APR, secured loans are the best borrowing options for you.

2)Shop around in the market- Don't hurry while making loan decisions. Shop extensively, look for various deals available in the loan market and compare various secured loans. Surf the Internet and don't always rely on the high-street banks. Nowadays, private and online lenders offer attractive deals. Compare varied loan quotes on the basis of the APR, loan amount, loan tenure, additional charges and schemes offered by different lenders.

3)Read the loan agreement carefully- Once you have decided in favour of a particular secured loan deal, read the agreement letter produced by the lender carefully. Ask the lender the true cost of the loan. This will include the nominal rate offered by the lender + the annual charges and arrangement charges (if any). Don't rely on the word of mouth. Always ask the lender for each clause or offer to be formally written.

4)Be realistic- Secured loans are calculated on the basis of your home equity. But, never borrow more than what you require. You may be eligible for a greater amount than what you require but then you may not be able to afford the monthly installments. This may lead to bad debts. If you can afford to pay back the loan in a short tenure, do so. This way, you'll pay less interest on you loan.

Availing secured loans is a great decision and you should think logically and strategically before finalising any deal.