Advice: Never borrow money on the spur of the moment

Q: I am thinking of getting a loan of £3,000 to replace part of my roof before the winter as it is leaking in several places. Do you have any advice about loans?

A: Here are some handy tips to help you when you borrow money, take out a loan or use credit cards:

• spend time shopping around, researching what’s on offer and getting advice. You may think it will take too much time if you need a loan quickly but you’ll be paying the price for years to come if you don’t

• always look at the total amount you will have to repay when borrowing money. A shorter repayment period may be better than a slightly lower Annual Percentage Rate (APR) amount

• make sure you know the difference between secured and unsecured loans. A secured loan means you can lose your home if you don’t keep up the repayments

• work out your budget before you borrow to make sure you can afford the repayments

• never borrow money on the spur of the moment. If you’re buying something really expensive such as a car or furniture, think about payment options beforehand. The credit offered by the sales staff may be more expensive than other options

• if you’re thinking about taking out payment protection insurance with a loan, make sure you really need it. Check that you’re not covered elsewhere first and check the terms of the policy carefully to see that it meets your needs. Many policies won’t cover you in certain circumstances - for example if you’re self-employed, over retirement age or have a medical condition

• be really careful about signing up to interest free deals. They’re only interest free if you pay them off within a certain time period. If you don’t pay them off within this period, you will pay a very high rate of interest

• watch out for the offer of a payment holiday on credit card and loan agreements. This is where you can stop making payments for a short time, but are charged extra interest once you start making them again. What seems like extra money in your pocket is actually a way to make sure you pay more interest to your lender

• always try and pay at least 10 per cent of your balance every month on your credit cards. If you only pay the minimum amount, you’ll be paying forever

• don’t borrow from loan sharks. If you’re finding it difficult to get credit, see if there’s a Credit Union in your area instead or see if you can borrow from the Social Fund.

• Get free, confidential and independent advice from your nearest Citizens Advice - go to www.citizensadvice.org.uk/nireland or call at: Citizens Advice Newtownabbey, Dunanney Centre, Rathmullan Drive, Rathcoole, Newtownabbey, BT37 9DQ. Telephone advice is available 9am - 4pm each day on 028 9085 2271 (Lunch 1 - 1:30pm), email advice is available on [email protected]