The economy is the fuel which makes the people of this planet lead a normal life. The transaction of money is needed for anything and everything we need to do for our survival. We can’t even imagine spending a day if the transaction of money stops.
When every one of us accepts the fact that money is needed for almost all affairs we need to do, simultaneously we are to accept the fact that the insufficient money can cause a lot of difficulties. Whenever such situations arrive when we are out of the budget, we borrow money. Borrowing money can help us to get over the situations where we were in need of some extra fund to resolve the issues going on in our lives.
Till a few years ago, people use to borrow from their friends or families. But at present time, the professional lenders are many in number. Those professional lenders started lending money for various purposes such as buying a home, buying a car, travelling, pursuing higher education, personal needs, business needs etc.
One can avail any kind of loan from those professional lenders if he/she is eligible for it.
How Can Loans be Helpful?
There are a great number of personal finance experts who believe that a life should be debt free. But this ethics cannot be followed at all the times. Sometimes life throws such situations on us where only borrowing can help us out. May it be a medical emergency or financial support to run your business. A home loan has become the financing tool of more than 90% home buyers of the present day. Without a home loan, the dream of buying a home would have been a mere dream for many of us.
Different Types of Borrowers
Though it is undeniable that loans can help us a lot but a loan becomes helpful only when we use it mindfully. The examples of such borrowers who had a bitter experience with their debts are many in numbers. Taking all those situations into consideration, borrowers are divided into three categories.
The borrowers who borrow money to own an appreciating asset are better known as mindful borrowers. When people take loans for an investment which is assured to give a high return in coming days, such loans are called good credits. A house loan or a student loan is the loans taken by the mindful borrowers. Mindful borrowers take a loan to enhance their financial life in future.
The next category of the borrower is the forceful borrower. A forceful borrower avails a loan because the situations go beyond control and money becomes an urgent need. Most of the personal loans are availed by such forceful borrowers.
The Third category of a borrower is the reckless borrower. Such borrowers borrow money to fulfil their desires without gauging repayment capacity. This type of borrowing is dangerous as such borrowings can turn into a debt trap. Such borrowers borrow money to spend on lifestyle expenditures or invest in depreciating assets.
Here are Some Reasons Which have Made Debts a Part of Our Lives
i) The Uncertainty Of Life
Many a time people are forced to take a loan because they were not well prepared for emergencies of life. Life is uncertain and any unplanned expenditure can arise at any given time. If you are lacking adequate emergency fund at those moments then a credit will be the only way out. So those uncertainties are one of the biggest reasons which make us have a loan.
ii) The Inflation
We are the victims of inflation. No one can deny the fact that our income is not increasing at the same speed at which the prices are increasing. Each and every daily-use commodity price is increasing at a high speed while the growth of income has become slower. While trying to balance the ratio of income to expenditure, many a time we fall in a shortage of money and we are to borrow.
iii) Investment for Future
There are a huge number of people who borrow to invest. A house loan is the best example of the same. The interest on a home loan is very low. Moreover, it comes with other additional advantages such as tax exemption, top-up loan etc. So many of us opt for a home loan while buying a home. A home loan makes us own a property which will be much more than the investment amount.
vi) The Business Need
The people who are into any type of business needs a free flow of cash at all the times. Ideally, the cash needed for working capital should come from the business revenue. But if it happens that the revenue is not enough for running the business, we will be in a huge crisis of money. In such situations, a business loan can act as the lifeline of the business.
v) Our Dreams
We have only one life all of us have some dreams to fulfil. Someone may dream to have a fairytale wedding while some others dream to travel around the world. Most of the times, money becomes the obstacle that keeps on postponing our dreams to come alive. In such situations, there is always a door open which we call loans. We can avail a personal loan online and fulfil all our dreams.
At this present time, it is quite normal to have debts. We can rarely find a person who is free from any debts. Though it is true that having a debt is not a bad remark for your personality not knowing how to handle your debts can be hazardous. One must keep a sharp eye on his debts. The debt and income ratio should never cross more than 50%. One can use tools like debt consolidation loans if they want to manage multiple loans efficiently. If you avail loans for good reasons and handle it skillfully, they will always act as a friend who helps you in your needs.