Life is full of twists, turns, and challenges. You could be riding on Cloud 9 today, only to find yourself in dires straits by the following week. The only thing that’s guaranteed in life is that nothing is guaranteed, and for that reason, you should never flat out reject any resource that can help you improve or fix a bad situation.
For many people, loans fall into that category of items they absolutely try to avoid at all costs. Much of it stems from fear; the belief that by obligating yourself to a loan, you’ve failed in life, and are broadcasting just how bad things have gotten for you. For others, it’s the fear that comes from ignorance; simply being afraid that you don’t know what goes into a loan, and that you’ll get saddled with a bad deal.
These may very well be valid fears, but as anyone who has given up alcohol or tobacco will tell you, the first step to solving your problem is admitting you have one, and you’ll need all the help you can get to recover. Loans are a resource, nothing more, that you can take advantage of to help you get your life back on track, so long as you’re responsible about it. If you find yourself in any of the following situations, then you should definitely consider swallowing your pride, and exploring the options that a loan can offer you.
Major Purchases
The first item on this list doesn’t even necessarily entail that you’re in a bad spot financially, or even that anything is wrong in your life. It simply means that you need or want something that’s going to cost a lot of money, and you can’t afford it on your own. That’s no problem; it’s why loans exist in the first place!
Examples of major purchases might include a house, a new car, home repairs, or even a vacation that you and your family have dreamed about. These types of purchases often cost thousands of dollars, and very few people are in a position to dish out that kind of money on a whim. There’s no shame in it, and additionally, a loan can even help you increase your credit score, so that you have more options in the financial sphere in the future.
There’s nothing wrong with borrowing money to afford the things you want. Everyone deserves to treat themselves now and then to something that will enrich their lives, or allow them to have an experience that will stay with them for the rest of their days, and a loan is a very viable option to achieve just that.
Maxed Out Credit Cards
Credit cards are so easy, aren’t they? From the moment you’re approved, and you call to activate your card, it’s easy to feel like the world is at your fingertips. Need to buy a couple hundred dollars worth of groceries? Swipe the card. Need to pay your utility bill? Swipe the card. Saw a beautiful dress that would look absolutely gorgeous for your upcoming anniversary date? Swipe the card.
Credit cards can definitely make our lives easier, but for many, the lap of luxury they enjoy quickly devolves into turmoil as the interest rates compile, and you start missing payments. It’s all too easy to fall into a cycle of credit card debt that can seem impossible to escape from.
If you find yourself unable to pay your bills, or your credit cards start getting declined at the store, you need to take an honest look at yourself and realize that this problem isn’t going away on its own. This is a situation where a loan is not only practical; it may be the only real option you have left.
By using a loan, you can consolidate all of your credit card debt into one location, with one interest rate, and one monthly payment that you have to keep up with, instead of many different agencies. In addition, by using a loan in this way, you can not only reduce or eliminate your debt, but also help your credit score to recover from the hit it’s no doubt taken from overusing your credit cards.
Bad Credit
Speaking of your credit score, if yours isn’t very good, or even if it isn’t where you want it to be, a loan is a great option to help raise your score. Credit scores are based on a number of factors, including your payment history, the length of your credit history, and your credit diversity. By using a loan, you can tackle all of these factors simultaneously.
Your payment history refers to how responsible you’ve been in paying your bills on time, and making at least the minimum payments due each time. You credit history refers to how long you’ve had access to a particular line of credit, and your credit diversity means the number of different types of credit you can access.
A loan can potentially improve all three factors of your score. By getting approved for a loan, you’ll have another account to diversify your portfolio, a chance to improve your financial history by paying back your loan on time, and establish an even longer history by spreading out your loan’s life cycle over several years.
Facing Foreclosure or a Having Your Car Repossessed
If you’re in danger of having either your home or car taken away from you, or if you think that it will come up in the future, a loan can give you the breathing room you need to get your finances back on track, or avoid disaster altogether.
A very strong factor you should consider about getting a loan to avoid these two scenarios, besides not wanting to lose your house or car, is the impact it could have on your credit score. The minute the bank starts foreclosure procedures, or a dealer comes to repossess your car, your credit score is going to take a severe drop. This will make it difficult to take out a loan in the future to fix these issues, and by extension, purchase a new car or house, so use the better credit score that you have now to get a loan with a higher limit and better interest rate.