Remember that loans are not free, they must be repaid with interest
The Bank of Ghana (BoG) has outlined essential tips for individuals to consider before taking or applying for a loan.
This initiative forms part of its ongoing financial literacy programme focused on promoting responsible borrowing across the country.
According to the BoG, the first and most important consideration is to ensure that there is a genuine need for a loan or any other credit facility before proceeding to apply.
The BoG outlines the following key tips:
• Critically assess your repayment capabilities before deciding to access a credit facility.
• Remember that loans are not free, they must be repaid with interest.
• Obtain and compare loan offers from multiple lenders to determine the most suitable option.
• Before signing any loan agreement, ensure that you receive a Pre-agreement Disclosure Statement from the lender (similar to a proforma invoice). Review it carefully and seek advice from a financial advisor if necessary.
This document outlines the terms and conditions associated with the loan.
By law, all lenders regulated by the Bank of Ghana are required to provide this document to prospective borrowers before any loan agreement is signed.
The Pre-agreement Disclosure Statement should include the following information:
• The interest rate of the credit facility (indicating whether it is fixed or variable).
• The Annual Percentage Rate (APR).
• Any additional fees and charges, such as commissions, administrative or processing fees, commitment fees, and insurance.
• The repayment schedule, indicating whether repayment will be made in a lump sum (bullet repayment) or through monthly installments.
• Late payment penalties.
When considering a loan offer, pay close attention to the quoted interest rate.
Look out for the Annual Percentage Rate (APR), which represents the total annual cost of the loan—including interest and all associated fees and charges.
By understanding these factors, borrowers can make informed financial decisions and avoid unnecessary debt burdens.
See the full list below
SSD/MA
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