There are many different offers on the credit market: clients can apply for a consumer loan, issue a credit card or invest a share in a credit union in order to receive loans there in the future. But is there always a need for them?
Before applying for a cash loan or taking out a loan online, it is better to find as much information as possible. It contains facts about loans Jackson TN and even reviews of previously taken ad successfully paid loans back.
What loans are considered useful/useless loans?
Conditionally, loans can be divided into two categories: those that will benefit and those that bring losses.
Useful loans are funds that in the future will compensate for losses incurred due to loans. These can be loans for business, home or car loans.
All other loans are considered unprofitable: the borrower will have to repaid with the interest that he could potentially accumulate on his own. These include consumer loans: they are most often issued in small amounts, since they are intended for small spending.
Consumer loans are targeted (when the bank issues a loan for a clearly stated purpose in the agreement: to buy a car, household appliances, for medical treatment, for the purchase of medications in offline or online drugstores) and non-targeted (in this case, the borrower has the right to spend the money received at his own discretion).
It is recommended to use small loans only in emergency cases: for example, when money is urgently needed for treatment/medications/healthcare services. If you need small household appliances, it is better to use installments: this way the amount of overpayment will be minimal.
How to calculate the allowable debt burden?
Debt load also plays an important role in making a decision on a loan. So, it is recommended to keep the amount of loan payments at the level of no more than 30-40% of the family’s monthly income. Otherwise, the cost of loan payments may be overwhelming.
For example, many medical workers recommend buying a car that costs no more than 3 monthly family paychecks, whether on credit or with your own money.
So, before taking out a loan for medical treatment, you should evaluate:
- whether there will be enough savings to pay it back. Debt load should be less than the monthly family income, at least twice;
- what are the risks. During long-term loan payments, it should not be ruled out that at any time you may be overtaken by dismissal or illness. Even during lending, the family’s income should be able to save at least small amounts for a “rainy day”;
- whether saving will be inconvenient. If the debt burden does not allow you to enjoy the usual way of life, over time, the stress of repaying the loan can develop into a serious crisis. Do not forget about your own psychological comfort.