Why Do People Need Loans

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There are many reason why someone may need to borrow money.  Quite often, borrowing money is a fact of life.  If you are planning to own a home some day, start a business, get a higher education, you will likely need to investigate getting some kind of loan to help you get started.

Very few people start out in life with access to a lot of money.  You either have to earn it or borrow it during the course of your life.  This isn’t a bad thing.  Most people take out a loan to get started.  It gets you off to a running start and you can pay back the lender over the course of time.

I never much thought about this when I was younger.  I was ready to go out and conquer the world without a care.

However, I quickly found out that getting a good higher education costs money.  I needed to invest in my own education.  This was my first real experience in taking out a loan.

At first, I was fairly nervous about getting an education loan.  Fortunately, I was able to save some money and have a portion of my tuition subsidized through scholarships and grants, but it didn’t cover everything.  The rest, I had to make up in student loans.

Student loans are often government subsidized (mine were) and generally have lower interest rates.  Although I was nervous taking out the loan at the time, I’ve never regretted borrowing the money to complete my education.  It was an investment in myself.

Later in life, I learned that buying a house is expensive…  really expensive.  Although that’s something that we all know as common sense, it doesn’t really hit you until you are actually shopping for a house.

If I had to scrape and save for a full cash offer on a house, I’d be retired and ready for a nursing home by the time I had all that money saved up.

Fortunately, home loans are available for the eager, young potential homeowner.

A home loan is another loan that is a good investment.  Your monthly mortgage payments are an expense that comes back to you in the form of equity.  Afterall, you are buying a piece of property with your loan.  Most of the time, property appreciates over times, so it’s unlikely that if you keep your property for the life of the loan that you’ll lose money.

In addition to the normal advantages of appreciation, there are sometimes tax breaks on your mortgage payments that make it more beneficial to own a house.

Also, people sometimes forget the simple fact that housing is an expense that you will have to pay, whether or not you are purchasing a home.  Most everyone needs a place to live.  If you don’t own your house, then you are renting.  It’s much better to pay a mortgage and get equity in exchange, than it is to be paying someone else’s mortgage in rent.

There are a number of common loans.  While it’s important to not get over your head in debt, taking out a loan can have significant benefits.

If you are starting out in life, a loan may help you invest in yourself.

If you are buying a house, a loan can help you invest in property.

If you are starting a business, a business loan can get you off to a running start.

The list can go on and on.

The best advice I can give is to keep an open mind and don’t automatically discount getting a loan.  However, make sure you have a plan for paying your loan back.  Crunch the numbers and figure out your equities and liabilities in advance.  Be realistic about your goals.  Try not to overestimate your ability to repay the loan.  If you do it wisely and make sure you investigate and do all your homework, a loan can be a good investment.

If you are considering a loan you may want to check out some online services such as 1ststop.co.uk.  Online service can often give good rates, since there is a lower overhead when operating on the web.

Article written by

Richard is a full time professional, husband, father and blogger juggling all the responsibilities of life and running a blog. Richard enjoys writing about life and online money matters.

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