Don’t Take Loan When You Have Money

Taking out a loan is a big decision. There are so many things to think about and consider before you sign the paperwork. Instead of rushing into the decision, take some time to figure out if your situation can benefit from the use of loans or if you are just digging yourself deeper into financial insecurity.

i. When You Should Take Out a Loan:
You should take out a loan for large purchases like a home or a vehicle. Most people do not have the money to pay cash for a home or a vehicle. Loans are a popular option in these situations. The interest on home loans is often deductible when tax time comes.
You should take out a loan when you have the ability to pay it back. If you have a set income that will cover your loan payments, loans can be beneficial.
You should take out a loan when you want to build or improve upon your credit score. If you’ve had some trouble with credit in the past and want to raise your credit score, loans are a good start.

ii. When You Should Not Take Out a Loan:
You should not take out a loan when you have no way of making the monthly payments. This is setting yourself up for failure and could lead to a poor credit score and, if you participated in any of the secured loans programs, you run the risk of having your property repossessed.