When to Borrow Money
There are many reasons to borrow money and there are times when you should not borrow money
. You need to decide when you see something you really want if you can afford it whether by paying for it outright or buying it with a consumer loan.
We all have credit cards that we use for various items. When you use a credit card you should be buying something that is defined as consumer goods that you will pay for in a short period of time.
When you go to buy a new or used car then you should not use your credit card to pay for it. With the interest rates that credit card companies charge you would be paying a premium for that vehicle. So in the case of a new or used vehicle you should use a consumer loan to borrow money to pay for that vehicle. It's a good idea to purchase a new vehicle when the dealers are offering zero interest loans for their new cars and trucks. They will generally do this when they want to move out inventory like when a new vehicle year is approaching.
Consumers generally do not save up to purchase consumer goods these days. Credit is often very easy to get and why deplete your resources when you can get a decent rate on a consumer loan? If you want to purchase new carpeting for your home you might be able to pay for it using the equity in your home. This would be a home equity loan and using the value of your home to fix up your home makes good sense. You can use a home equity loan to remodel the kitchen or bathroom. Generally certain home improvements increase the value of your home. If you have to reroof your home this is also a good reason to use a home equity loan. You generally should not use the equity in your home to buy a new boat or a recreational vehicle.
Sometimes you need money for a short period of time like for an emergency. If you are employed you could get money quickly by using a payday loan. You just have to repay that short term loan with your next paycheck. There are certain qualifications that apply to this type of loan.
Of course you would apply for a mortgage if you are buying a new home. Sometimes when a developer needs to sell their new home inventory they will offer very low interest loans if you qualify and are able to purchase one of their houses in a very short period of time. Sometimes they will offer the models with special financing programs just to get them sold. This is a good way to get cheap financing for a certain period of time. Often this is a loan that is offered to new or first time buyers only.
Yes there are times you should borrow money to make a purchase and there are times when it just doesn't make sense.
When to Borrow Money
By: John Miler
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