Personal wishes are often bigger than your own wallet. Favorable loan offers suggest that dreams are simply fulfilled. But a loan can also become a debt trap and pose great difficulties for consumers. Basically, borrowing needs to be well thought out.
Here we present situations in which you can safely take out a loan.
Buy 1 living space
The dream of owning a home or a condominium is widespread. Rising rents are helping more and more people to think about buying their own living space. If the loan rates are in the range of the previous net rent and there is a secure job, then the dream of owning a home can come true. The value of the property secures the loan amount.
When choosing a suitable property, make sure that the property remains at least stable in value over the next few years. This way they don’t fall into a debt trap if the property has to be sold. The high level of security in real estate loans ensures pleasantly low-interest rates.
But be careful: try to determine a realistic value of the property and ask experts for advice. Don’t buy your dream apartment at any price!
Finance a car
Many cannot imagine life without their own car. But very few drivers can simply pay for the new car in cash. A car loan can be useful for the purchase of a new car or a young used vehicle. Here, too, the car secures the credit as equivalent.
With an annual mileage of less than 20,000 kilometers, a loan is a sensible solution. Remember that in addition to the installments, you must also be able to take out comprehensive insurance, taxes and operating costs.
Exchanging the existing Good Credit through debt restructuring
As a look at the credit interest rate index shows, interest rates have dropped significantly in recent years. At the beginning of 2011, 6.97% had to be paid for 10,000 dollars (duration 36 months). Today it is only 5.58%, almost 20% less than three years ago! Figures as effective annual interest and for 2/3 of all customers.
Cratchit families have become significantly cheaper since 2011. Here you can see the example of the average 2/3 interest rate for a loan over 10,000 dollars and a term of 36 months.
You can use the lower interest rates to reschedule existing Good Credit with higher interest rates. A loan change quickly pays off, especially for larger-volume and long-term financing.
The loan as interim financing
If the required amount is theoretically available but is not available at the desired time, you can take out a loan without hesitation. The tax repayment, the time deposit or the payment of life insurance is pending in the foreseeable future, the desire or the need for an acquisition is now given. In this case, it is possible to finance the purchase through an interim loan. With the expected amount, repayment is certainly possible.
Investing in the future
Many purchases will pay off in the future. A car enables you to take up positions that are inaccessible by local public transport. A washing machine not only saves time, but it is also cheaper in the long run than going to the laundromat and cleaning. The costs of an apprenticeship will also generally pay off in the future through better prospects on the job market and higher earnings.
Checklist and summary
Taking out a loan can make sense if …
- the purchase is actually necessary (e.g. a car to go to work),
- the repayment is very likely to be secured,
- there are no alternatives (e.g. borrowing money from the family),
- the costs of the new loan are cheaper than for existing financing,
- You have a secure income
- the investment will pay off in the future.
Better refrain from a loan if …
- the money is used for short-term pleasure (e.g. vacation),
- there is no guarantee that the monthly installments can be repaid,
- there are cheaper alternatives that you can pay for without a Good Credit (e.g. used TV instead of the latest model),
- further urgent purchases are pending in the future.