Loans are a very common aspect of finances, especially in today’s society where new forms of businesses and new industries are slowly becoming more prominent in the market. There are people who think that receiving loans from a financial institution is never a good thing, since you essentially end up paying more money than the money you receive.
But this is, as you might have expected, a matter of perspective, since a lot of people can greatly benefit from a loan, especially under very specific circumstances where they can either generate a profit from them, or straight up benefit from discounts.
Ideally speaking, however, one should only apply for a loan when a relatively reliable financial stability is at hand, to ensure we are not ruining our credit scores while at the same time, not risking our lifestyles.
There are many different types of loans as well, some of them aimed toward different objectives. We will, however, cover one particular category, known as a consumer lån or personal loan, and discuss the most frequently used types and how to take the most advantage out of them!
A Basic Explanation of a Loan
Just in case you are unaware, loaning is the process in which an individual or financial institution provides money to someone, under the promise of said money being paid in a certain time frame with added interests.
The main disadvantage of a loan in said interests. The rate of interest usually depends entirely on the type of loan you are receiving, and the institution providing it. Some loans, like the lån på dagen or payday loan, are famous for their high rate of interest, while providing the advantage of immediate cash.
On the other hand, the main advantage of most loans is the comfortable monthly payments, which allow people to have access to money without having to risk a lot of their monthly income, which then creates opportunities that otherwise would be unattainable.
What People Usually Do with Loans
Loans can be used for a wide range of things. Consumer loans, specifically speaking, are used for personal reasons, ranging from the purchase of a car, to the payment of higher education, commonly referred to as student loans.
However, they can also be used to purchase or have access to products and services. The purchase of jewelry for a marriage proposal, the purchase of plane tickets or hotel rooms for a romantic honeymoon, or the purchase of electronics such as smartphones, laptops, or computers… There are many examples that can be provided!
The way they can be used depends entirely on the person wanting the loan, thus, having a solid idea of what you want to do with the money you will receive is essential to be eligible for the loan, and it certainly simplifies the process as well!
Credit Scores are Decisive
The most important aspect to take into consideration is the fact that, in order to receive a credit from a financial organization or an individual, you are commonly required to have a good credit score.
A credit score is the history of expenses, savings, debts and payments you have with your bank of choice. Simply put, your credit score is completely determined by the way you handle money, not only the one you receive through your work, but also the one you receive from your bank, like credit cards and other loans you might have received previously to the request of the new loan.
Thus, it is very important to handle money responsibly to be eligible for a loan in most situations!
Taking Advantage of the System
It can be rather difficult to decide how to take advantage of the loaning system, since it, as mentioned earlier in this article, is a matter of perspective. Different circumstances and goals require different approaches, so to speak, but there’s a general rule of thumb that applies regardless of the situation: Take advantage of one-time-situations.
For example, let’s say you are short in cash, but you have been planning to travel overseas for quite some time. Surprisingly, one of your airlines of choice is running a limited time offer that reduces the price of tickets up to 40% for the next weekend!
This is usually one of those opportunities that you can’t let pass, and in such a situation, getting a loan to take advantage of the said offer is definitely a wise move, since you’ll be essentially saving money in the process.
The same can be said for limited-time products that will never be available, or events that require you to act immediately, such as the anniversary of your marriage with your partner, or the birthday of a person you care for. As someone said back in the day, money can always be obtained, but memories? They hardly come by!