The Five Stupidest Things People Get Personal Loans For

A loan incurs interest during repayment, so it’s important to only do so in times of need. There are many people who become victims of sunny loans debt and then require to form an iva to write off their un-payable loans. To simply put it: remember that you cannot borrow more than you can repay because aside from the interest, most loans also require a collateral and you risk losing both if you do not pay. In the event that you may need to get a loan, be sure to avoid getting the following loans:

Weddings

The golden rule, which is living within your means, also applies to weddings. A “special day” is not an excuse to create a layer of debt or add to it, especially if you’re in the process of settling student loans, mortgage, and whatnot.

Instead of a grand wedding, focus on investments and save up for emergencies. Aside from basic needs, you will need to stash some cash in preparation for a bigger family. Remember that the amount you spend on your wedding day is not tantamount to the days you will be spending with your partner, so it is best to be smart about it.

Gifts

Holiday shopping is one of the top reasons why people loan, but it’s also why most people go into debt during the holidays. Even if you have a good credit history, your personal loan can skyrocket because of interest. There is a risk that the price you will pay for the toy you bought will be twice as much as its original prince, so why risk financial stability for something temporary?

A child will grow out of his toys, but you may never go out of debt.

Vacations

Traveling is one of the best ways to relax, but you shouldn’t take a loan for it because it lacks lasting benefit. There are ways to travel cheap, and if you can’t keep expenses low, it’s best to save up and wait for the opportunity to come.

Think of vacations as a consumption, and a car as an investment. The enjoyment of a vacation is limited, while a car offers years-worth of benefits and enjoyment — including travel. You can also sell the car when the time comes and get monetary compensation in return. Check out Newcastle Permanent personal loans for flexible car loans.

Investments

Borrowing to invest money is actually a bad idea because you double the risk of going into debt. The key is to work with what you have and can afford. Remember that an investment should be money you’re ready to lose, and if you’re not, be sure to save them first until you do.

Your returns will be swallowed by tax and other costs, so it’s best to consult a financial advisor or any professional before doing anything rash.

To Loan to Other People

A loan to someone close to you is money considered gone, unless you have it in writing. However, aside from the awkwardness in asking for a repayment, misunderstandings on its interests and payment terms may arise. You risk both money and relationship — making it one of the worst ideas for a loan.

In a normal lender-borrower relationship, legal action is taken if one doesn’t fulfill his roles, but this can be more difficult if someone you know is involved because it can become more personal.

References:

https://www.aol.com/2010/09/28/10-dumb-reasons-to-take-out-a-loan/

https://studentloanhero.com/featured/loans-for-christmas-gifts/

https://monevator.com/why-borrowing-to-invest-is-a-bad-idea/

https://www.moneycrashers.com/why-you-should-not-lend-money-to-friends-and-family/