When do you think it’s the right time to get a loan? On your 18th birthday? When you get your first job? Or, after you graduate from college? The correct answer is: when it’s right for you. So, how do you know?

What type of loan should I get? The type of loan you get should reflect your goal. Do you need to pay for college? A student loan might be a good option. Do you need a car to drive? An auto loan can help you. Are you simply looking to start building your credit history? Many teens look to credit cards or personal loans to help them build credit history. Whichever loan you choose, make sure you do your homework! Research a few different loan companies for information like interest rates, associated fees, monthly payment amount and repayment period.

What is credit? Your credit score is based on what is known as the four C’s of credit: character, capacity, collateral, and capital. When you first start out, you might have little to no credit at all. In this case, you might be required to use a co-signer. Commonly a parent or guardian, a co-signer agrees to pay the loan if you fail to do so.You can avoid this by starting to build a credit history in your teens with an SCCU Student Credit Builder Card.

Can I afford to pay back the loan? How will you pay for your loan? If you have a job, you need to make sure your income is enough to cover your loan obligation, as well as any other expenses you might have. If you do not have a job, some lenders will not consider you because you cannot prove that you can pay them back. Consider getting a part time job to show lenders that you are able to make payments.

Getting a loan is a decision that takes a lot of thought and research. Don’t let a lender choose for you- get the loan that fits you best. This process will help you down the road when it’s time to purchase larger items.