Borrowing money may seem like a right of passage in this economy, but it’s still a big decision that can impact your finances — for better or worse. How you search for an installment will determine whether it’s something that can help you in an emergency or something that will cause its own financial disaster later on. 

Keep reading to learn how to make an informed decision the next time you need help in an emergency. Here are some things you should consider before you borrow money online in Texas or anywhere else you may call home. 

1. Check Your Score

You’ll want to get into the habit of checking your credit once every four months. This helps you ensure all the information on your report is accurate and not bringing down your score unfairly. 

You’ll also want to check your credit any time you want to take out a loan—that includes other financial products like mortgages, auto loans, and student loans. This will help you get an idea of what sorts of loans are available to your financial profile. 

If your report shows you have worse credit than you realize, you’ll have to pivot your search for installment loans for bad credit. These financial products may be easier to qualify for with your less-than-stellar score. 

2. Know the Rates, Terms, and Conditions 

These three things let you know how much it will cost you to borrow, when you have to repay what you owe, and any additional information about how your installment loan works. You’ll want to make sure you understand every line of these items. 

Loan agreements can wind up being clunky and hard to read, but they should be written in plain English. If a lender sends you a contract that seems as though it’s written in another language, this is a big warning sign. They may be hoping you’ll sign without reading the contents, which  probably means they’ve probably inserted hidden fees that they haven’t disclosed yet. 

If you’re ever worried about hidden fees, look to your APR. The Annual Percentage Rate will include interest, finance charges, and any other fee applied to show you the true cost of borrowing. 

3. Compare it to Your Budget

Once you have repayment details, you can see how easily they fit into your budget. An installment loan is unlike a direct lender payday loan because you’ll have to make multiple payments to pay off what you owe. 

Generally, the payments tend to be fixed, meaning they won’t change in size over the lifespan of your loan. However, it’s always good to double-check your agreement to ensure this is true. 

Fixed payments are the easiest to handle, simply because you’ll only have to plug in one number into your monthly budget. Ideally, you’ll have cash leftover after you make your payments and fulfill your normal financial obligations, but it’s okay if you break even. 

If you can’t pay back your loan at the same time as covering rent or groceries, this isn’t the financial product for you.

Be Informed, Borrow Responsibly

Borrowing works best when you know how it can affect your finances — just remember these tips to help you make an informed choice.