Bank Loans : A matter of thinking before acting

There are endless articles that try to entice readers to commit to a loan. It benefits not solely the borrower but likewise the bank. However, prior to any quantum leap, consider age, marital status, other pending loans, fixed or variable hours of work, financial capability etc. Nevertheless, the chances are that this is a service which you can make good use of. However, do your homework well and do not rush with decision making.

Also look for and understand their typical usage of jargon.

Examples include APR, APRC, Collateral, Life Cover, Early repayment fees, Processing Fees. In so doing allocate the necessary time and effort to compare offers and choosing the right product.

A loan allows the borrower to achieve aims which are both short or long term; as a loan is a time related instrument. Thus, it makes good sense to identify the right product and therefore, repay the right amount in agreement with the bank in the period most suited to your financial situation.

Remember that a customer who has a bank account and regularly conducts his business through the bank in a transparent and responsible manner is looked upon favourably by the bank. This history facilitates things like KYC (know your customer) and Due Diligence procedures. Master the use of digital banking and avoid waiting in a queue when you can send a message and receive a secure reply; or for that matter apply for a loan online!

The perception is that a loan is a complicated bureaucratic affair, which can be ‘true’, but the customer needs to understand the regulatory position of the lender and the need to assess the borrower. Compliance to the Law is a requirement of all operators in the financial services sphere. The need for a loan varies and can happen at various life cycles. In the meantime, take every opportunity to enhance your financial capability and knowledge.

Emmanuel Schembri Former Bank Employee