Borrowing factors to consider and comparing interest rate on loan offering

The video explores borrowing money, assessing financial needs, and comparing loan interest rates. It covers factors affecting loan eligibility, such as income, expenses, credit score, and DTI. Strategies to avoid debt traps include budgeting, minimizing credit card use, and debt consolidation. The video also discusses comparing interest rates, considering fixed vs variable rates, APR, and loan terms. Tips for loan comparison and seeking financial advice are provided.

What is the primary consideration before deciding how much money to borrow?

• The repayment period

• The interest rate offered by the lender

• Your financial situation and budget

• The amount your friend is willing to lend

Which factor is NOT mentioned as impacting loan eligibility?

• Credit score

• Age of the borrower

• Income and expenses

• Debt-to-income ratio

What is a debt trap?

• A situation where you have no debt

• A cycle of taking more loans to repay existing ones

• A method to increase your credit score

• A strategy to reduce interest rates

What is the main advantage of a fixed interest rate?

• It decreases over time

• It is always lower than variable rates

• It offers stability and predictability

• It changes with the market

How does a higher credit score affect loan interest rates?

• It leads to higher interest rates

• It has no effect on interest rates

• It often results in lower interest rates

• It only affects the loan term

What should you do if you are unsure about comparing interest rates on loan offerings?

• Select the first lender you find

• Seek advice from a financial advisor or loan officer

• Choose the lender with the highest interest rate

• Ignore the interest rates and focus on the loan amount

What is the first step in comparing loan offerings?

• Research the lenders

• Compare interest rates

• Determine the type of loan you need

• Check the loan term