Whether it’s to purchase a new vehicle or finance a home we can grow into, at some point in our lives, most of us will need to borrow money. In fact, borrowing money and carrying a certain degree of debt has become an accepted, and expected, part of our financial life. But, the money-borrowing process can also be daunting, with countless opportunities to fall into scams, unmanageable debt, or worse.

With that in mind, how can we ensure we’re being smart about managing our loans and credit lines? Let’s dive deeper into the best ways to borrow money, from start to finish.

Shop Around

This advice applies to every financial transaction you could ever make — from mortgages, to car loans, to daily use of your credit card. All financial institutions that offer a service to borrow money compete with one another for customers through marketing and incentives. It’s up to you to seek them out, compare them, and determine which institution is worthy of your business and your trust.

Get Pre-Approved

When shopping around for a substantial loan such as a mortgage — likely the largest financial transaction you will ever make — the absolute best strategy is getting pre-approved. This is, essentially, a guarantee from a licensed lender that, if you choose to do business with them, you will be approved to borrow a certain amount of money at a set interest rate. If you print out this guarantee and stick it in the front of your portfolio, you will already have a minimum baseline to use as leverage with other lenders, which can prompt them to offer something better.

In addition to that, a pre-approval can also help put your finances into perspective, giving you valuable insight into what you can afford, what you should be looking for, and what interest rates you can expect. There are few things in life that have no downside, and this is one of them. If you are in the market for a new home or car, a loan pre-approval can only help you.

How Long Are You Going to Keep the Money?

When choosing the right loan for you, keep in mind that there’s much more to consider than just how much to borrow. Every loan comes with a set time frame which you will use to pay back the money borrowed. With different time frame options come different parameters that could be better or worse for you, depending on your situation.

If you are thinking about purchasing a home, how long do you envision staying in that home? Ten years? Five years? Two years? This is important to consider because, if you chose to sell your home in a time frame far shorter than the life of the loan, it influences how much money you will save or lose long term.

Fixed-rate mortgages have several different variations (10-year, 15-year, 30-year, etc.), but generally, the shorter the length of the mortgage, the higher your monthly payment will be. In return, however, a shorter mortgage will have fewer upfront fees associated with it, lowering your APR as a result. The longer the length of the loan, the more you will spend long term, even if your monthly payment is lower.

Knowing this, you can make an educated assessment of which option is best for you; if you only plan on owning the property for a few years, you will save more money accepting the fixed-rate mortgage with a higher monthly payment and shorter time frame. On the other hand, if you envision living in your home longer, you will benefit more from lower monthly payments despite the extra fees and higher APR.

The same logic applies to car loans, as well. If you are the kind of person who only keeps a vehicle for a couple of years before trading it in, the higher interest rate on a shorter loan will work better for you.

Be Patient

Purchasing a new home, car, or other high-ticket asset can be a very exciting time, but don’t let that excitement cloud your financial judgment. Take a deep breath and try to approach the situation from all possible angles. Be thorough. Are there any variables you’re not seeing that may cause you to regret your decision later?

If there is anything about the lending process you don’t understand, don’t be afraid to ask your potential lender questions. Any reputable, service-oriented lender will make sure you are well-informed and comfortable with your decision. As they say, knowledge is power.