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Are Loans a Good or a Bad Thing?

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Charles Darwin was certainly ahead of his time when he published his theory of evolution more than 150 years ago. He believed that the fittest people are the ones that will survive. But fit for what? Survive at what? Most people automatically presume that he was talking about physical fitness and survival meant living longer. However, as time has elapsed  and here we are into the 21st centre, we realise that there was and is a much greater picture to his theory.

Being fit is more than just physical. It is also a mental attitude and an adaptable mindset too. We all have our own personal struggles with life, but it is astonishing to realise that most of our problems and struggles come down to financial.

Sure, we’ll say health is the most important thing in life and we all know deep down that is very true. But how long do those thoughts stay with us before everyday life takes over and that paramount point gets forgotten about as it gets eroded away by financial problems.

Most of us don’t set out to prepare for this rat race, but we cannot help but become part of it as we get swept along in our day to day activity of surviving. Be it to buy a house and keep up with the mortgage, renting a property, shopping at the supermarket for everyday essentials, buying clothes, children’s expenses, buying a car, car tax, car or home insurance, petrol etc. etc.

In the words of a great John Lennon song called Beautiful Boy, he sings in his lyrics “Life is what happens to you while your busy making other plans.”

Practically every one of the UK adult population will borrow in various forms on a regular basis to cope with the cost of living. Some type of borrowing has become so acceptable over the years  as far as society is concerned, that people probably don’t even think of it that way. A mortgage for example, credit cards or buying a car, television or a piece of furniture through a hire purchase agreement.

So here we are, on one hand encouraged to borrow money and take out some sort of finance, and on the other one, told not to borrow as it can lead to all sorts of financial personal disasters. So which one do we go for?

Most of us should be sensible enough and be able to differentiate, but it’s amazing how many of us cannot. That statement is meant as no sort of criticism whatsoever. It just can be, well, somewhat confusing!

At an early age we are told to build up our credit score for the future because a good rating is invaluable. This is good advice and certainly a worthwhile thing to do, but like everything in life, all things in moderation! Remember credit scores can also be adversely effected.

So can we educate ourselves to budget and control our spending at an early age? It is likely that if we can, the chances are that we will carry on in later life in the same fashion and that would only make our lives easier.

But even then, there will always be a sudden situation that hits us out of the blue. Maybe it’s an emergency of some sort e.g. a health scare , car repair, an urgent payment that will cause a massive problem if not paid on time. Or maybe we just want to spoil ourselves knowing that taking out a loan within an adequate time frame to pay it back is the answer. Each individual can only ask and answer these questions for themselves. After all, no two people are identical, so invariably the thought process will alter from person to person.

So for argument’s sake, let’s say someone makes the decision to take out a loan. We are not talking about a mortgage or hire purchase agreement, we are speaking about a personal loan. If it’s a short term loan (which may also be referred to as a payday loan) for let’s say no more than £1000, that person will need to decide how long they would need to take to repay it. They will probably sway between paying it back quickly to save extra interest, within a month for supposition, or taking their time and taking longer to repay, therefore manage easier smaller repayments. Perhaps opting between 3 to 6 months or even 12?

There is no right and wrong answer, but what is paramount is that whichever way that person opts for, they think responsibly, otherwise there may well be financial consequences. So this is the careful pensive time that must be taken before rushing in to borrow. Make sure that you are completely comfortable with the repayments due.

A long term loan is probably an easier decision to make as far as time spans go because as in the ‘long term’ description, it’s fairly obvious that it will be longer, probably without you even realising it. Chances are this type of loan will be for something more substantial. Maybe a home improvement or a car for example. A long term loan can be taken out for anything between 1 to 5 years. Again the same rules apply to this loan as they do to any others. Make sure that you are comfortable with the premiums due including the interest and with the time span to pay it all back.

So there is an equation that any loanee needs to work out and be happy with before going ahead and borrowing any sum of money for any reason. That equation is how much do I want to borrow? If I borrow that, how much will my premium be each month? How much does the total repayment accumulate to and how much of that is interest? If you’re happy with the answers that these questions give you, then chances are taking out that loan will be stress free and enhance your life.

About the author

Peter Davis Peter Davis is a Marketing Analyst at PaydayLoan123 specialising in financial products. Peter writes most of our articles as he stays up to date with the latest information. He enjoys most sports, particularly playing football and watching his favourite football team. Peter really like his food too as we have all witnessed first hand!

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