What should I take out a loan from a bank for?
Nowadays, loans are considered a universal way to bridge financial bottlenecks or to finance costly acquisitions. However, anyone who believes that loans are primarily taken out for home and garden as well as vehicles is wrong.
Loans have also long been a common tool when it comes to regulating household finances, holidays or even training and further education.
When does a loan make sense and what basis should be created?
In principle, there are only a few situations in which a loan should be avoided. This is especially true if the monthly income is incompatible with possible loan installments. Before a loan is even considered, it should therefore first be clarified whether the income can cover the accruing loan installments over a long-term period. Possible cost increases play a major role in everyday life, which is why the rates should not take up the last budget of the monthly income. A small buffer should always be taken into account for possible cost increases.
However, financial experts agree on one point: A cheap loan makes sense primarily if the current account is overdrawn regularly. The resulting overdraft facility usually includes very high interest rates, which can significantly reduce the monthly budget. To break this cycle, an installment loan is recommended, which entails a significantly lower interest burden compared to the overdraft facility.
What are the most common loans for?
The most common reason for a private loan is a survey by the banking association to buy a car (used and new cars). Household items are in the next places. The rescheduling of old loans is also one of the most common reasons for new borrowing. In addition to the material possibilities that a loan grants, the focus is on another aspect. A new loan is taken out at favorable conditions in order to be able to replace an old loan agreement at high rates. This means that the installments to be paid decrease significantly and make it easier to deal with monthly finances.
Building finance for your own four walls is not included in the survey. Especially when it comes to building a house, there are many reasons to take out a loan. While the cost of owning a home is only covered in a few situations by the monthly income, building a house itself is an investment and security for the future. After the loan has been paid in full, the property is 100% owned by the owner.
The loan thus helps to secure old age. A similar reason ensures that many people need money for training and further education measures as well as retraining and use a loan. While this step initially involves costs, the professional perspective increases at the same time as the probability of increasing income in the near future. Therefore, loans are also considered a sensible investment in this area.