Civil Servants’ Guide to borrowing money responsibly
This article applies to Civil Servants employed by the Zambian government. It is a guide to help civil servants in borrowing responsibly.
Considering the times we are in economically, borrowing money from a financial institution may be a convenient solution. It helps cushion the burdens you may experience when you’re cash strapped. Unfortunately for people, borrowing irresponsibly can be a nightmare. For that very reason, we came up with the Civil Servants’ guide to borrowing responsibly. Below are a few handy tips to guide you on how to borrow money responsibly.
Only borrow when you need to
It is very important to differentiate a need from a want when it comes to borrowing money. And even you establish that you need the money, check to see if you really need to borrow for that need. This technique will save you from the pain that comes with over-borrowing. You’ll also create a healthy habit of getting a grip of your finances.
One other thing you should consider when assessing your need to borrow is to know your debt-to-income ratio. Ensure that the money you borrow does not exceed your income. This is of course in relation to your monthly repayment amounts. General rule of thumb is to not have repayments more than 40% of your monthly income.
Do not make the decision to borrow in the spur of the moment
This almost didn’t make it in our Civil Servants’ guide to borrowing responsibly. But we realized that some people do make these hasty decisions to borrow money. They do this either in the heat of the moment under pressure, or just to borrow for pleasure. This is by far the most irresponsible decision a Civil Servant can make. If it’s a purchase of furniture or appliance, always ask for payment options over time.
Always pay your loan on time
This may seem as a no-brainer but very few people do this well. You can’t blame them though, there are many reasons as to why most Civil Servants may not pay on time. Your salary could be delayed, or an emergency may arise that may require your money. In foreseeing such instances, have an auto-repayment process with both your bank and employer, or lender. That way, as soon as money hits your account, the amount you owe is paid back to your lender. Paying on time gives you a good credit score with the Credit Reference Bureau of Zambia. Meaning, you reduce the chances of being blocked as bad debtor, that will not have access to loans from lending institutions.
If for some reason, you’re unable to make a repayment in a month, it is always best to communicate to your lender. Let your lender know in advance and not wait to be pursued. That way, you build a good reputation with both your lender and at the same time avoid being blacklisted on the Credit Reference Bureau. Be transparent and work out a plan on how you’d make the payment.
Avoid borrowing from Loan Sharks
Borrowing money from a Loan Shark is commonly known as “Kaloba”. Borrowing this cash that you’ll most likely get immediately, usually comes with a high-interest rate and at times with collateral. A loan shark, by definition is a money lender that practices predatory lending – much like a shark preying on small fish in an ocean. Most Loan Sharks, if not all, are unregulated and illegal. Meaning you’re not protected when you happen to fail to pay your debt and can most likely lose your property or whatever collateral you used to borrow the money you got. A safer and legal way to borrow money is to use a registered legal lender like PremierCredit Zambia.
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