Should you take a loan?

I hate taking out loans.  If you are like me it feels as if you are living under a dangling sword which might fall at any time.  Of course you might be offered a loan but is it always in your best interests to take one?

Personal loans, also known as unsecured loans, can help you fund a large expense or consolidate debt without requiring the use of collateral. This is different from a secured loan, where you might use your car or house as collateral for the loan. In the event of default, lenders can use collateral to recoup their money (for example, by repossessing a car or, in the case of a house, foreclosure).

Loan- The Drawbacks

The biggest problem with taking a loan is that you end up paying much more than you actually borrowed.  It may be great to get a lump sum of money but there is always the little reminder that you have to pay it back!

Interest rates can be very high on some loans. However a little investigation can result in discovering which financial institutions have the lowest ones.

It is financially sound to ensure that your income can meet your current needs as well as service any loan.  This means that after paying the loan you must be able to meet your other financial obligations.  If you decide that you need to take the loan there are other issues to consider.

Sometimes a bank may not approve your loan unless there’s a cosigner or guarantor.  It might be difficult to find someone willing to risk being held responsible for your loan in the event of that you can’t service the loan.  It might seem unlikely at the time when you take out a personal loan – but don’t forget that it’s possible you will be able to pay off your debt early.

Many loan providers will apply a charge if you wish to pay off the loan. If you think there is a good chance you will want to settle your loan early, it may be worth searching for a deal that comes without any early repayment charges.

Then there is the endless paperwork. The forms and other documentation are required by the financial institution to determine if you are a good candidate for a loan. There is also a credit background check to determine if you have a good credit history.

Loans -Do You Need One?

One important advantage of taking personal loans is that it can help with debt consolidation.  This means if you have other smaller debts, you can consolidate and have one repayment option.  If you take a short term loan it can go a long way to ease some financial stress!

If you do decide to take out a loan ensure that you always pay on time to avoid poor credit history!

The key of taking out loans is to do your research as it can provide some breathing room so that you can continue to work towards your financial goals.

What’s your take? Let me hear from you!

Teri Ann Renee Paisley

Gleaner online writer

Tags: debts, Loan