However, this easy availability has also caused problems as several women often end up taking loans even when it is not necessary. It is very important to be able to rightfully decide if applying for a loan is the right thing to do.
Since one has to pay interest on loans, it is important that a loan is taken carefully so that it does not end up causing a burden. Both the scenarios are explained below in detail for proper understanding.
When to Take Loans – Mortgage Payment
If your mortgage payment is due and you do not have enough money in your bank account then going for a loan may be your last option. Since a house is one of the most important things, applying for a loan in such a scenario is understandable. However, one should try to always first look at other options. There are many financial institutes that may be able to help you in bringing down your mortgage payments.
Additionally, you should try to take a loan from an institution that offers low rates. There are many programs that are specially designed to help people in this scenario. The decision should be taken with care.
If you do not have insurance (medical insurance, over 50 life insurance, etc.) then you may get into trouble. Hospital bills can be cumbersome. The best option is to have insurance. However, if you failed to take the right measures then you should apply for a loan to clear your hospital bills before they cause any trouble.
Education is not something that one should compromise on. If you have to pay for your schooling then make it a point to apply for a loan before the time to pay the fee arrives. Nevertheless, you should only go this route if you actually want to study.
When Not to Take Loans – Holidays
It is never a good idea to go on a holiday when you cannot afford to. It may look easy to apply for a loan and visit your dream destinations; however, in the long run, this decision can cause huge problems as you will eventually have to pay back the money plus interest
Shopping on credit is not a very good idea. Many experts are of the view that one ends up spending unnecessarily when shopping on credit. Nonetheless, the problem starts when it is the time to pay the money back.
Shopping on credit has several disadvantages. It may hamper your reputation and might even make it difficult for you to secure a loan in the future. This is why it is important to be careful and not take loans for shopping, until and unless there is no other option.
Almost everyone wishes to have a business. Many women dream of running their own companies, but they are often not able to do so mainly due to a lack of finance. Applying for a bank loan may look like an easy way to kick start your business.
Yet, one should be wary. Investing in a risky business can backfire. You may not only end up losing the investment but may have to suffer huge losses when there are no profits and you have to pay interest from your own pocket. Decisions regarding investment should be made carefully after proper risk assessment.
The author is a financial adviser giving people suggestion on how to use their finances. She mainly works for women helping them in securing loans and starting their own businesses. She believes that instead of loans one should take other precautionary measures such as having over 50 life insurance.