5 Reasons why not to take a Personal Loan?
Loans | Personal Loansby Priyadarshini 23 September 2020
We are in the middle of a global Pandemic and it is not easy to manage financial commitments. Lack of job security, lay-offs, and steep fall in cash flow are the primary concerns of people today. Many people are put on a no-pay cycle and job seekers are on the brink of despair as a ray of hope is a distant dream. People are scrambling to meet their immediate household expenses. A personal loan may make for a possible solution in these trying times, but is this the only solution?
Read below to understand if you have the right reasons to apply for a personal loan.
A surge in Personal Loan queries are on the rise since Covid-19
Singapore is witnessing a rise in the number of finance queries ever since the Pandemic began. Governments are offering cash-pay-outs however, sometimes it is not enough to run all financial commitments with it. People are trying to figure out how bank loans could help ease the stress. If you too are considering taking up a personal loan, think thoroughly as taking up a loan in these unstable times could put you at risk. So, before you go running to the bank, use your due diligence, and be sure of what you need & why.
5 reasons why you should never take a personal loan for?
A Want not a Need
If you are one of those who think that this Pandemic ruined your plans to travel and you can’t wait to take a long vacation abroad then, think again! Covid-19 has brought the entire world to a halt and there are millions out there not able to incur expenses for a day. It is not a wise thing to take on debt for your “wants”. Learn to use self-restraint and distinguish between what you need and what you want.
Poor Investment Sense
Well, no one will tell you investments are a bad thing, yet you need to keep in mind that all investments are risky. You may lose all the money or a huge chunk of it. So, taking up a personal loan to boost your investment could turn out to be a bad idea. Especially, in the current markets where stocks may not perform so well and it may be difficult to liquidate assets for an urgent cash requirement. Even if your stocks perform well, the growth rate might be lower than that of the interest rate you are paying on your personal loan. So, be wise and do not rush for a personal loan just because some stocks appear lucrative. Markets are highly unpredictable & you never know what’s at the end of a tunnel!
A Lifestyle You Want
It’s one thing to have an interest in fashion & designer products and another to go out of the way to maintain a lifestyle that’s beyond your income capacities. Of course, we all like to flaunt on our ‘gram’ but that doesn’t mean you buy designer products, spend extravagantly on retail, indulge in high-end restaurants with debt on your shoulders. There is no sense in imitating a lifestyle you can’t afford and spiral into a heap of debt.
If you have major planned events upcoming in your life, and you think you are short on funds, so personal loan could be the solution? We warn you, it is not. Maybe it your wedding and you had it all planned with gala events, lavish proposals, etc. but you missed out on saving appropriately. Unfortunately, all of the planning is in your head and your finances do not match because you ran to store, the minute you knew limited-edition footwear being sold. Wedding expenses can run high so you need to plan it carefully. Having a luxurious wedding can only impress your guest for a little while, but it may bring unwanted financial stress to your married life. Don’t rush into taking up a personal loan for planned events. Instead, try to have steady savings so that you can live the wedding of your dreams!
Look for other Alternatives
If you want to take a personal loan to fund your education, renovate your home, buy a car, start a business, etc. then research well and look for other alternative options. There are tailored loan options available to meet such needs. You do not need to take up a personal loan, as specific loans will give you better interest rates. Also, if you plan to apply for a personal loan to pay off your past debts then you need to work on your finance management. A personal loan cannot be your go-to option for bad money management.
Always, plan carefully before taking up any kind of debt. It has to be a well-thought-out & informed decision. You can take up a personal loan only when you absolutely need it for urgent requirements.
To know more about loans, get in touch with our experts.