Although loans are a healthy tool when it comes to financing some extra expense, the truth is that they should not be abused. The secret to a full financial life is just knowing when and how to use the credit, and this implies correctly identifying those times when it is worth borrowing and when it is not convenient to do so.
These are 3 examples of situations where the best thing to do is to take the idea of applying for a head credit:
1. When he bought something, but he lacked money to buy something else.
If you want to make a significant expense (such as buying an appliance or a trip) and the money is not enough, there is nothing wrong with borrowing – sometimes it is even better than paying with a credit card. But if the reason why it is not enough is that you previously went shopping and spent what you had, and it occurs to you to borrow to continue shopping, then a loan is not what you need, but stop buying.
2. When others borrow:
If you want to take out a loan to help other people, that is, give them the money, it would be better to think twice. And is that risking your financial reputation assuming the debts of others, is almost always a bad idea. Take responsibility for your own expenses, but not for others, since if something goes wrong and your name is the one on the debt, who will have to answer will be you.
3. When it is not enough to pay a debt:
If you borrowed and now it is not enough to cover the monthly fee, asking for a loan is not appropriate. This tactic is that of the carousel and works like a vicious circle, always borrowing to cover what is not enough. In this case, a more convenient tool is the portfolio purchase.
You know, if you are going through any of these situations, stay away from loans; If, on the other hand, the expense you want to make has been planned and you know what you need, the best thing you can do is compare your options before applying for the desired credit, so make sure that you are not charged very high interest or imposed unfair terms.