You have found the prefect lender and the loan rate you wanted. You are poised above the contract, ready to sign you name. You think the new car or house you will use this loan for is only a signature away – but is it? According to financial experts, most people end up spending more than they need to on loans. Avoid these pitfalls and save hundreds of dollars – or more - on your loan.

Uncertainty about loan types. Many people have no idea of the difference between lines of credit, direct loans, unsecured loans, adjustable loans, no-interest loans, secured loans, and home equity loans. You need to understand the different types of loans that are available to you and which type of loan works best for you.

Lack of understanding of loan terms. Plenty of people sign up for loans with no understanding of how long they have to pay back loans and how they will have to repay the loan. You need to make sure this is clear to you before you sign the loan. Make sure that the terms of the loan are guaranteed and that the lender cannot simply call in the full loan whenever he or she pleases.

Lack of research. Before you sign your loan, you need to make sure that you have compared enough loans to make you feel confident that you are getting terms and rates that are good for you.

Bad lenders. All lenders are not the same. Before you sign a loan, make sure you check with the Better Business Bureau and with previous clients of the lender to see how reputable he or she is. This is especially important if you are dealing with an individual lender or a small, new lending company.

Not understanding how loans work or how interest is alculated. Loans need to be paid back and you need to know that the interest you pay at the start of the loan may increase. Are you guaranteed to have the same payments monthly and the same interest rate as long as you keep repaying the loan? Is interest calculated daily or monthly?

Not understanding all related costs. Are there fees or hiddencosts to the loan? If you are getting the loan through a third party or broker, there may be additional costs. Are these costs a one-time fee or monthly payments? Would it make more sense for you to get a loan directly from a financial institution or lender and save on administrative and “finder’s” fees

Not understanding what happens in case of non-payment. Before you sign any loan agreements, make sure you know what happens if you miss a payment or are late with a payment. Some lenders will only charge a small late fee while others will cancel your contract and demand payment in full.

Not reading the contract. You should always take a copy of the contract home and read each clause before you sign anything.

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