Many of us certainly happened not once before the decision to take a loan. Some people need cash to buy new consumer goods, others want to cover previous obligations or they are short on current expenses. Is credit really the best solution in every situation and will it be given to a given destination at all? raisinrats.com has more details
When deciding on a loan, we should be aware that it is the main source of income for the bank that grants it. And the interest is exactly what we will pay with the installments. Sometimes, when a bank evaluates our financial situation, uncertain and risky interest may be high or a loan application may be rejected. Therefore, remember that if we take a loan in a specific amount, it is not exactly the amount that we will have to pay back.
Bank and non-bank loans are not free
Taking a loan to finance a purchase, for which we have already deposited a certain amount, we do not put ourselves at risk. In the situation of ceasing to pay installments, the bank may simply take over the fixed asset purchased by us. This is the case, for example, when we take a car loan or a home loan. The situation looks much worse when we borrow money from the bank to meet current needs or to regulate previously incurred liabilities in the form of loans or credits. Why in this case will we take cash to repay installments with interest since even the basic things we missed? In this way, we can fall into the spiral of debt creating newer and newer debts. Car loans or home loans are much easier to get when we have financial security.
The situation is similar in the case of a business loan. When we have experience and education in a specific industry and our own financial resources to start it, obtaining a loan for its co-financing will be a formality.
Will I be able to pay off the loan?
In summary, when taking a loan you should pay special attention to your own financial resources. You need to look at your situation from the point of view of the bank. Evaluate your own creditworthiness, i.e. how much the state of our finances will deteriorate when there is an additional charge in the form of loan installments with interest. We must also consider other ways out of our situation, ie a loan from friends and family. We should, nonetheless, refrain from undertaking any kind of obligations, especially loans for current consumption. Money intended for consumption purposes will not bring any profits in the future.