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When Do You Really Need A Loan?


When to go out and get some funding


Whether you’re a college student or a hard-working parent with a family to care for, the financial situation can often seem dire and the options available when it comes to earning enough money to cover life’s cost can sometimes seem limited and narrow-focused.

Loans are often not the favoured option by most, but they can seem to be the only option available when things really get tough. If there’s no other means to cover rent or even utility bills for the month, many turn to loans simply to cover the bare necessities. However, is this really the best route for everyone? How do you know when you really need a loan, and when there’s a better option available to you?

It all depends on your specific circumstance.

Can you handle it financially?

This is the most important question you need to ask yourself, first and foremost. Perhaps you’ve run into trouble this month, or you spent a lot more money than usual; which may be quite relevant, given the immense strain of Christmas time and a family eager for heaps of presents, whether you’re a struggling student or a successful businessperson.

This time of year is expensive for everyone, so if you just need a little extra money to cover your costs for the month, and you’d rather take out a loan than eat into any savings you may or may not have, then this could be the best option for you.

Of course, this does not apply if your financial situation is heading into a downward spiral. If you know things will be just the same for you a month or several months from now, then you have to ask yourself, ‘How will I pay this off?’. When you can’t answer that question, it’s not the time to take out a loan.


Assess your current spending habits, first and foremost.

This is the most important place to start, but it’s something that so many people in debt forgot to do before they took out a loan they couldn’t handle. Of course, this is understandable. Money is the root of most people’s fear, and, when things are looking tough, it can lead many into a panicked frenzy, along with rushed, ill-considered decisions. You might find that simply cutting down on certain elements of spending (when it comes to luxury items or excess) could be enough to help you cover the necessities once more.

There are ways for you to call the shots.

You have to consider that, if a loan isn’t fixed, its interest rate or a number of other variables could change, and you could be left in a heap of trouble if you don’t have a comfortable sum of money to cover that.

However, if certain types of loan aren’t for you, that doesn’t mean they all aren’t. Different loans suit people of different financial standings. There are so many personal loan types that you could consider, and these types of loan are definitely a more favourable option for those who have assessed their financial situation, but realise they can only afford a fixed, specific amount. If you offer collateral, this lets the lender know that you’re serious about repayment, because you value the item in question and wouldn’t want to slip up on repayments, in turn handing over ownership to them.

All in all, the question of whether you should borrow money all depends on your specific financial information. The most basic requirement is that you must be able to pay it back one day. If you’re in a temporary tight spot and you need to cover a cost which just can’t wait, then a loan may be the way forward. If a regular cost is occurring that you can’t afford month by month, then it’s time to say no to a loan and avoid a spiralling cycle of debt.

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