It is common to relate debt to something bad, but there are times when getting a loan can be a good way out, either to avoid paying even more expensive interest, to cover any emergencies or to avail a good deal. Many people, however, end up seeing on an out-going loan to spend superfluous expenses that do not match their current financial situation.
So in this post we will show situations in which getting a loan can be interesting. If you are:
If you are financially tight and paying debts, the tip is to swap the expensive debts for cheap. If you are paying exorbitant interest on the overdraft or credit card, for example, getting a personal payday loan can help you reduce – and much – the size of the problem. Just compare how much interest is charged for each of the credit modalities. By using the overdraft, rates are more than 250% a year, while the personal payday loan charges around 50% a year. In the case of the credit card, the difference is even greater, since the interest charged if you do not pay the entire invoice exceeds 440% per year.
If you have more than one debt, the ideal is to raise all of them and start repaying the ones with the most expensive interest first. See our post on how to get rid of debt.
With debts organized and consolidated, it becomes easier to have predictability about the benefits that you have to pay every month. It is also important to ensure you pay the installments on time so you do not rewind. For this, you can use an expense spreadsheet or an automatic financial manager, which allows you to look at your moves from anywhere.
If you are spending much of what you earn, but you have a budget cut or you can cut some expenses, picking a personal payday loan might be a good idea to buy something more expensive than you want or realize a dream. For example:
If you need to take a course to develop skills that will help you in your career and consequently result in a salary increase later, it may be a good idea to take out a loan. The same goes for language courses outside the country (exchange). In the case of university courses, however, it is worth researching student credit options that may come out cheaper.
If you really want to set up your own business, have already researched the market, already identified your branch and made the right business plan, borrowing money to kick the idea can be a good one. But, it is important to plan for the company’s future cash flow and be ‘down to earth’ when estimating the demand for your product or service. If you have assets to give as collateral (eg car) the chance of getting lower rates increases.
We never know when we can go through some emergency as a health problem in the family and so it is important to always have a financial reserve. But we do not always have the extra money for these occasions. If you do not have a relative or close friend who can borrow without interest, a personal payday loan can be a solution.
If you’re putting off renovating your real estate for years and you can not see the peeling walls, seepage, or that unfinished room, getting a loan can be interesting. But it is important before closing the contract you make a spending plan to be able to save and pay the installments on time. It is worth to see if you can reduce those non-essential expenses, such as restaurants, leisure, travel and shopping in general. See our savings tips.
One important note: Avoid spending on superfluous things like changing your cell phone, or something that will give you a future cost of maintenance. Examples: car, motorcycle, boat, gourmet coffee maker, pets, building a pool, among others.
Do not seek the loan amount only in your bank. The high interest rate variation will make the difference in the total amount of debt to be paid. In addition to physical financial institutions such as banks, there are online loan options that have lower interest rates.
Be careful when choosing the financial institution where you will get the loan and do not accept making deposits before receiving the money – there are great chances of being a scam. Look for referrals on the internet and between acquaintances before closing a contract.