Going into debt is something that many folks avoid because they worry about their ability to repay the loan. While it’s always good money management advice to avoid some types of debt and instead look for ways to cut back on expenses and increase savings, financing can be the key to achieving the lifestyle that most Americans want and desire.
Borrowing money to pay for things over time, such as taking on debt to purchase a house or car, is often seen as being worth the interest that is charged to borrow the money. Mortgages and similar types of secured loans are often seen as favorable types of debt because the interest rate on these types of loans is often lower, since the mortgage is secured by the property. The buyer is also acquiring a durable asset that will both raise the borrower’s standard of living, and the asset can be sold later on to raise money should the buyer choose to do so.
Mortgages are Great, but Other Loan Types Can Play and Important Role in Funding Important Expenses
When it comes to financing other important purchases, such as funding a family trip, covering unexpected medical bills, or paying for tuition, books and other supplies for higher education, many of us may be a little too quick to dip into our savings, and pull money out of our retirement plans or take on the expense of a second mortgage when other financing options may be more affordable.
One easy way to finance necessary expenses that most folks overlook is to apply for an unsecured short-term, personal loan, such as fast installment loans. These types of personal loans are often a more affordable option than credit cards, which often come with excessive interest charges of 25% or more on the balance.
A short term, personal loan is also likely to be easier on one’s budget that payday loans, which also feature high-interest rates and expensive finance charges. When individuals and families turn to credit cards and payday loans to finance expenses, they risk of defaulting on at least some of their debt rises as the high-interest charges and fees associated with these types of debt add to their already strained budget.
High Interest Rates Make the Risk of Default Very Real for Most Households – Personal Loans are a Viable Alternative
For many, financing is the only way to achieve their dreams and to have the lifestyle that they desire, but care should be taken when borrowing to only choose loans and other financial instruments with reasonable interest rates and other charges. When borrowers take on debt with high interest rates, the risk that they might become unable to afford the payment is very real. According to data from the May 2016 Federal Reserve report, The Economic Well-Being of U.S. Households, which is the latest edition of this annual report, around one-third of all American adults, or about 76 million adults, are still struggling to make ends meet.
Personal loans that feature reasonable rates and low fees help households to be able to secure their finances and afford to take a special, life-changing vacation with their loved ones, go back to school and further their education so that they can get a better job, or even take care of unexpected expenses that might otherwise leave them unable to cover their monthly bills.
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