Personal loans – pros and cons

06 May 2013 - Mark Maffia

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Personal loans – pros and cons

Personal loans can be helpful, but should be chosen with care

Some people call it ‘backwards saving’ if they don't want to save up for something they would like to buy, but take out a loan instead.    It could be a dream holiday, the car one has always wanted, or maybe you just want to fulfill a wish – a personal loan certainly can make things possible from one day to the next.

The advantages of a personal loan

If you desperately need a holiday and change of scene, and now is the time, because your employer gives you one or two weeks off, but you happen not to have enough money on your account – to take out a personal loan could be the right thing to do.

Maybe the object you have long desired is unexpectedly available at a good price – it might be best to take the opportunity and pay for it with the help of a personal loan.   Equally, an important repair might be necessary which should not wait.  Again, a personal loan can make it possible.

Are there disadvantages?

Borrowing money always means that whatever it has helped to pay for becomes more expensive. Depending on the interest rates, it can easily make a low-price purchase not worthwhile.    Also, a personal loan means an extra burden on one's monthly household budget and should therefore be planned very carefully.    Many people underestimate the dangers of ending in debt and therefore it is always worth considering if it is not better to save the money rather than to borrow it.




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