With the evolution of a consumer society, everyone has started spending beyond their financial capabilities.
Everyone has big dreams, owning a car, a dream house, and other luxuries. But the expenses for these luxuries are not readily available. When one does not have the sufficient funds, it doesn’t mean they have to give up on their dreams. A loan is the answer to all the financial problems. It gives you the freedom to pursue your dreams even with a limited income.
Loans are not availed just for fulfillment personal goals. Several other substantial reasons cause people to seek a loan from a bank or other financial institutions.
The following are the 6 common reasons why people decide to opt for a loan:
A business cannot be kick-started without a huge capital investment. Finding this capital doesn’t come easily to everyone, unless own has their own money or personal sponsors. The source of this capital for most others is a loan. When taking a loan to start a business, a business or a personal loan is normally availed. But it also depends on the kind of business and the cash flow it requires.
A loan taken for business development and expansion is probably one of the best reasons to take a loan, as this is more of an investment. A business can open opportunities for prosperity in the future, and will also guarantee returns in a few years.
Debt consolidation refers to taking a loan to pay off a number of other liabilities and pending debts, generally unsecured ones. Thus, effectively, multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms: a lower interest rate, lower monthly payment or both.
Debt consolidation has been a much debated topic. Several experts have expressed their views for and against debt consolidation. There has been a lot of argument for and against debt consolidation. Someone say that consolidating multiple debts into one single payment will make the payment process much easier as opposed to if you would take care of all the loans separately. It is also said with helping in reduction of interest rate.
Others, however, are of the opinion that debt consolidation is too risky and it will drag you lower with debt than you already.
It is difficult to say which road is the safer one. For taking the best decision based on your situation, it is advisable to seek the help of a professional advisor who will provide you with a personalized plan.
Education costs have been sky rocketing in the past years and not expected to stop in the near future. Not everyone is able to afford the college fees without taking a loan. Unless funds are sourced from scholarships, grants or the private sector, loans are generally the way to go.
- Personal Purchases like Property, Car
Buying property, whether a plot of land or an apartment is on everyone’s bucket list, as is owning a car. These are big purchases which require sufficient amount of capital. Usually, this amount of money isn’t readily available to be spent on such investments. Thus most people generally opt for a loan to buy land or a car. The loan can be easily paid back in installments and one doesn’t have to break the bank to make the purchase. Thus it’s a win-win situation.
For paying off bills such a credit card payments, hospital bills or even utilities, banks offer the option of taking a short term loan.
Short term loans essentially provide for tenure of less than one year. They are usually one time loans availed in case you are not able to obtain credit from a bank for a longer tenure loan. In case of these loans, the tenure for repayment is shorter than other loans and interest is usually payable on the principal advance amount.
One never knows when and under which circumstances emergencies will pop up in one’s life. Whether it is unanticipated medical costs, accidents, etc, one will have to shell out money in these conditions. Not everyone has enough resources for such rainy day expenses. In these times, there is no other option than to take a loan from a bank or borrow money from private lenders.