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If you think you need extra cash, then getting a loan can be a really big help or a major mistake. Loans can be taken out for all sorts of reasons, for example to buy a house, finance the purchase of a car, build a business, pay a bill or other personal reasons.

However it’s important to stop, think and take a holistic view before getting into any loan arrangement. The amazing thing about us ladies is our ability to pre-empt the future.. so let’s use this skill.

Credit Score

Getting a loan is all about numbers. Knowing and managing these numbers well is the main difference between good and bad debt. The first numbers we will look at is your Credit Score. In the UK your Credit Score can be found out easily for free online using sites such as Basically it’s a measure of how good a borrower you are i.e. if you pay off your current debts on time. The higher your Credit Score is, the greater your chances of getting credit.

Some Simple numbers

So now that you have checked your Credit Score, you are one step closer to getting that loan. How about the repayment? Seems manageable? But is it really? Have you considered all your other monthly commitments and expenses to know if you can afford the repayments?

Here are simple numbers that can help. If your monthly loan repayment is greater than 30% of your monthly gross salary, you might struggle to make ends meet. So do the maths before you get that loan.

Loans aren’t free

The type of loan you get determines the amount of interest you will have to pay. Your lender should let you know exactly what your loan will cost you, and any charges that might be incurred if you pay off the loan early.

Tick tock, Time costs money too..

Paying off a loan over a long period of time might reduce your monthly repayments but will cost more overall at the end. It is usually cheaper to borrow over short period of time.

Can’t pay? They’ll take it away

Yup that’s right. A lot of loans are secured against some sort of collateral, which means if you can’t pay or miss a payment you might be losing a piece of property. In addition it might affect your chances of getting another loan in the future.

It’s important to remember that no matter how many times financial institutions try to encourage us to take out loans, ‘Cash is King’ as they say. Or rather for us working ladies, ‘Cash is Queen’.. So if in doubt, don’t take that loan.

Written by Tomi Buko

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