Personal loans: Efficient tool for good financial planning | Ramsay family Blog

With the purchasing power comes a great discipline.

When you need cash and do not want to use the one you have already saved, the second best option could be a personal loan. Yes, you may want to read the first sentence again, but you read that right. Like all financial decisions, you cannot buy products of this type without first understanding if it is right for you.

Financial planning needs some skill, some knowledge, some cunning and little help. When deciding on a personal loan you have to be clear about why and why you need the money. Personal loans have costs and benefits. Before you start looking at financing options, consider these pros and cons.

Hold on to your own money

Hold on to your own money

When you use a personal loan, you don’t need to empty your bank account so your money keeps working for you. This can improve your feeling of financial stability because you have money in the bank. Available to you, in case you need it. This is a good feeling.

 

You don’t have to wait (to save) to have the money

You don

When you take a personal loan, the money is ready immediately. It is not necessary to postpone a purchase while saving money. You just need to request, get approval, and receive the money. Another way to save is to get a loan that has a lower interest than what you currently have. If you can refinance a loan and lower the amount you pay monthly you can save the difference.

 

The more you borrow (and pay) the better offers you can receive in interest

The more you borrow (and pay) the better offers you can receive in interest

The way the credit system works is that when you borrow and show that you are responsible for the loan payments within the stipulated period, it means that you are a good customer. More lenders will be willing to lend you money in the future. Each time the interest rate should be one of the best available. This strategy can also help you raise your credit score. There are different types of credit and for the eyes of the lender it is a good sign that you not only have a credit history, but you have experience handling different types of credit. If you have no experience with car loans, mortgages or student loans this can help you create a credit history interesting enough for future lenders.

 
Money costs money

 Money costs money

When you borrow, the bank will want you to pay with interest. After all, when you borrow, you are using the money of others. Whoever lends money needs to cover the cost for the time you have the money. The other risk to the lender is that you may not have the ability to pay the full amount.

 

Future payments are known, future earnings are not always

Future payments are known, future earnings are not always

When you borrow money, the payment schedule is known and the payment amount is agreed and the specific dates on which they will be made. Unfortunately, the income is not necessarily fixed or guaranteed. Thus we match a fixed payment with a flexible income. This usually works well, but there are times when income is subject to change.

 

The more you borrow, the more lenders want to lend you

The more you borrow, the more lenders want to lend you

If you have unlimited access to enough capital, you might be tempted to borrow more than you really need. This makes you start creating needs, because you know you can get the money and pay it on time. Access to funds does not mean you have to borrow. You can do it when you need it, but don’t overdo it.

Applying for a loan to manage your finances makes sense if you know how to do it. Understanding the need for a loan is vital and you must think and plan ahead in order to achieve financial success. It is also important to consider whether a loan helps you reach your financial goals, when is the appropriate time to obtain one and most importantly, if you can afford it. Since this must be a well thought out decision, I invite you to read this article again and decide for yourself.

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