5 Good Reasons to Borrow Money



Protecting your personal financial health sometimes requires investment, beyond cash on hand. From education funding to personal instalment loans, various borrowing options serve the needs of consumers seeking financing. In most cases, the loans are designed for particular needs, such as a mortgage for the purchase of a home or car loan to get you on the road. But some types of financing carry less specific conditions, leaving spending decisions in your hands. Short-term financing and unsecured personal loans, for example, furnish fast, flexible access to cash, which can be used for a variety of purposes. It is up to you to weigh the advantages of each form of financing, and to evaluate the cost of repayment.

It doesn’t always make sense to borrow money, but responsible debt is a natural aspect of personal finance. As a rule, you should only turn to lenders when borrowing for a worthy purpose. To make the most of your credit opportunities, consider the benefits and costs of taking-on financing.

Can you afford repayment? Is the expense justified? Which lender offers the best rates and terms? Answers to these and other important questions help guide you to the best financing option for your needs. Although each person’s circumstances are unique, the following examples represent a few of the many good reasons to borrow money.

Self-Improvement

Investing in yourself is never a bad idea. The cost of education and training, in particular, is easily justified – even if you need to borrow money while in school. There is a direct relationship between credentials and earning potential, so a degree or certificate enhances your lifelong income.

Emergency Spending

Despite the best laid plans, life yields plenty of unexpected financial challenges. Fortunately, many are easily overcome with the help of outside funding. Personal loans and other flexible financing can be used to cover the cost of countless personal emergencies – repairing or replacing a broken-down car for example, or updating a failed household appliance. If you need a short-term bridge loan, use your paycheck to guarantee an advance, or secure a personal loan for more substantial emergency funding.

Financial emergencies take many forms, including interruptions to household cash flow. If your earnings are off, a loan can be used to cover living expenses as your finances recover.

Debt Consolidation

Under certain circumstances, it may be possible for you to lower the cost of your personal debt, by taking-on a loan. Your personal debt load probably includes obligations to various creditors, each carrying individual repayment terms. Interest rates, particularly on credit cards, may not reflect the best available terms, dragging you down with high interest payments. By consolidating, you may be able to pay-off high-interest financing, in favor of a single loan, offering better rates and affordable repayment terms. A debt consolidation loan isn’t always the most direct way to reduce outstanding balances, but for those struggling with multiple, unmanageable debts, consolidation may provide financial relief.

Major Purchases

Home ownership is a personal financial achievement many Britons strive for. Not only does it furnish a sense of security, but investing in your home also provides financial benefits. As a savings account, payments made toward your mortgage build equity, which can be used as collateral for future financing. And tax benefits may also result from home ownership, helping you make the most of your personal income. Unless you have cash on hand to cover its full purchase price, however; buying a home would not be possible, without mortgage financing.

Depending upon your income and financial goals, a second home or investment property may justify financing. Buy-to-let isn’t for everyone, but makes financial sense, in some cases, for those seeking a hands-on investment.

Add Value to Your Home

Home improvements and updates to your property serve multiple functions. To start, upgrades are enjoyed for as long as you reside on the improved premises. But investing in home improvements can also yield financial gains, particularly for those selling in the short-term.

If you want the best possible return from home improvement spending, target upgrades you know will give back. Kitchen renovations, for instance, attract buyers and boost sales prices. And low-budget upgrades, such as painting and flooring, provide substantial benefits, without major financial commitments. Depending upon the cost and scope of your project, equity financing or an instalment loan may be your best funding approach. With advantages like steady repayment schedules and low interest rates, online lender comparisons highlight features of each instalment loan alternative.

The lending industry caters to countless consumer funding needs, offering several types of financial products for borrowers. Your personal financial health is at stake each time you borrow money, so it is up to you to evaluate your financing needs and secure the best interest rates and repayment terms. Use your best judgement and our online lender references to set yourself up for success.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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