Key factors to consider
Total cost of credit
Look at the total repaid over the term and the APR, not the monthly payment. Long terms hide large numbers.
Productive or consumptive
Borrowing for something that raises income or holds value is a different decision than borrowing for consumption.
Repayment stress test
Can you service it after a job loss, a rate rise or an unexpected bill?
Alternatives
Delay, downsize, sell something, negotiate a payment plan, or borrow less. Each avoids some of the cost.
Fees and flexibility
Arrangement fees, early repayment penalties and variable-rate clauses can change the deal materially.
Common mistakes
- Comparing loans on monthly payment rather than total cost.
- Borrowing more than needed because it was offered.
- Consolidating debt and then re-running up the cleared balances.
- Ignoring early repayment penalties.
- Using short-term credit for a long-term shortfall.
Questions to ask yourself
- 1.What will I have repaid in total by the end of the term?
- 2.What happens to this repayment if my income drops for six months?
- 3.Is there a version of this plan that needs less borrowing?
- 4.Does this purchase earn, hold value, or neither?
- 5.What's my plan if I miss a payment?
Ready to decide?
ThatEcho turns this into your own workspace — goals, criteria, weighted options and a transparent recommendation you can question.