Borrowing money is simple. Unless you're up to your eyeballs in debt or your credit score is shot to pieces then getting HP or a personal loan is effortless. Lenders fall over themselves to hand out money.

But don't sign on that dotted line until you've read the fine print and are equipped with some top tips:

Borrow from the bank of mum and dad
Most of the time the cheapest loan you can get is from friends and family. If you can go down the low interest family loan route then give it some real consideration.

But beware that borrowing this way can blow some families apart. Mum and dad may never get the money back, or siblings can become bitter and twisted about favouritism.

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Credi.com, which operates over the ditch, is about to launch here. This website doesn't lend money, but instead provides an online process formalising the family loan. The loans can be set up, negotiated and contracted online, providing the documentation to ensure both sides are covered if something goes wrong.

Shop around
The first deal you're offered isn't necessarily the best. Car yard loans and retail hire purchases can have high interest rates and charges attached.

"There is always a cost to convenience, says Henry Lynch, chief executive of Co-op Money NZ. "You get caught up in the event of buying the car or whatever you want to purchase and they sell you a loan."

It's better to go car shopping with a pre-approved loan from the bank, credit union or building society.

Fees really matter
Set-up and other fees on 'interest-free' and other loans are one of the ways that lenders squeeze extra profit from you.

You can bet your bottom dollar such lenders profit handsomely from the fees, and the people who don't pay the loan off in time. Lynch points out that the minimum payments aren't designed to clear the loan before the date interest kicks in.

According to new research by CreditSimple.co.nz, 12 per cent of Kiwis don't complete the payments within the interest free period. Miss a payment along the way and you also damage your credit score, says Hazel Phillips, CreditSimple.co.nz spokesperson.

She says 18 per cent of Kiwis who have a personal loan have been overdue on monthly repayments at least once in the past 12 months.

Watch out for extras
There may be other expenses such as unnecessary insurance and warranties, or fees for missed payments and other misdemeanours by borrowers. They all hike the true interest rate you're paying when they're tacked onto the loan.

Don't make assumptions
Just because a company advertises on TV/radio or claims to be offering the best deal you should still shop around.

Peer-to-peer lenders can offer a good deal. But they charge different interest rates according to how risky you are and for some it's cheaper to go to the bank, building society or credit union.

Pick the brain of a budgeter
If you are borrowing, get a second opinion from the local budget advice centre, or alternatives such as credit unions, iwi, universities, churches and Citizens Advice Bureau all of which often have a budget advisor attached. Such advice is free and can often lead you to local sources of finance or options you hadn't considered. You can find a budgeting adviser via: Nbfcct.com.

Think twice about refinancing
If you can refinance to a lower interest rate without being hit with fees then do it. Banks and organisations selling debt consolidation loans often make their money from the layer of fees they load into the loan. Or they extend the payment period meaning that although monthly payments are low, you'll pay more in the long run.

Pay it off as fast as you can
The longer your loan is outstanding the higher the total interest you pay. So that car or TV costs you more for every extra month you're paying interest. Beware of break fees, however. When the loan is paid off, don't start revolving your credit and buying more and more.

Of course the best loan is the loan you don't get. If you can save for what you need, make do with the old banger, or simply stop spending, then you'll almost always be better off financially in the long run.