In today’s reality, many people lack money. That can lead to improper living conditions, life dissatisfaction, and even malnourishment. However, not many people want to get into debt to improve their quality of life. Most probably, that is so because our parents, teachers, and even books taught us not to borrow money from anyone.
While sometimes this advice can be helpful, completely avoiding loans can backfire – and in this article, we’ll tell you how. Find out why you shouldn’t be afraid of personal loans, when it’s safe to borrow money, and how to borrow money without jeopardising your future.
What Are Personal Loans?
Personal loans are a way to borrow money from a lender. The amount of money you can borrow, the duration of the loan, and the interest payments are all negotiable. These loans typically require no collateral, so they’re quite easy to get approved for. If you shop around, you can get a low interest personal loan.
Types of Personal Loans
When choosing a loan, there are many factors to take into account. The most common type of personal loan is an unsecured loan. It’s also called a ‘no collateral’ loan, since there’s no need to put up any property as a guarantee for the loan. The borrower can get a loan, not based on any collateral (property or assets they put up as a guarantee of repayment ) but rather because they have a good credit score.
By contrast, secured loans are secured by something you own, like your house or car. Secured loans are harder to get approved for, but they are also much cheaper. If you own something valuable that you can use as collateral, a secured loan may be better than a no-collateral loan. However, a secured loan would put your property at risk if you default on the payments.
It’s a huge investment – but it’s worth it
Let’s not kid ourselves, some people can go through life without taking loans. If your parents give you money for education and living expenses, or if you earn enough, taking out a loan may seem pointless. But the truth is, many people are in debt due to the fact that they didn’t invest in themselves.
Many people also want to have a home of their own but don’t have savings to buy one. There are also people who got an education but don’t have a job that pays them what they deserve – or even worse, can’t find a job at all. The reason is simple: they didn’t invest in their future.
Investing in yourself is never a bad idea.
Your education gives you the opportunity to get a better job and earn more money. In turn, that means you’ll be able to repay your loans sooner than later, and you’ll be able to live more comfortably.
Saving up for your own apartment may take years. That is why many young people rely on their parents after college or university. But if you live in your parents’ house, you’ll have fewer opportunities to socialise and make new friends.
Getting a personal loan can enable you to build credit so that one day you can buy a house using a mortgage. When you have a good credit rating, banks will trust you and offer favourable terms.
Loans can help you realise your dreams
In theory, taking a loan is a good idea because it helps you improve your standard of living without jeopardising your future. However, there are other reasons to consider taking out a loan – such as helping you achieve your dreams.
For instance, you may be an aspiring artist who has a great idea for a new song. If you want to record it, you’ll need equipment, and that will cost you money. Your personal loan can help you achieve this goal.
Personal loans can also help you realise your dreams of opening up your own business. You probably have all the skills and knowledge necessary to run your own business – but it takes money to start one. Your personal loan can become your first seed capital for your future venture.
Personal loans can make your dreams come true… if you know how to use them properly.
Personal loans are cheaper than payday loans and other short-term credit options
If you’re looking for a small sum of money to cover your expenses for a few weeks, then a payday loan is definitely the right choice for you. Compared to payday loans, personal loans charge lower interest rates and have longer repayment periods. This allows you to avoid quick cash advances and still get the money you need for your expenses.
Takeaway – Personal loans aren’t dangerous in moderation
Many people believe that it’s dangerous to borrow money from anyone – even from a bank or other financial institutions. This simply isn’t true. Personal loans aren’t dangerous as long as you keep track of how much money you owe and repay it on time every month.