Borrowing, credit and finance can be a slippery slope. With access to various forms of credit, some people can quickly find themselves over committed and in a pickle with their finances.

Debt can spiral pretty quickly, and one situation people can end up in a situation where they’re only able to afford the minimum payment each month- which means they’re only ever paying the interest and not actually making a dent in the balance. But while borrowing can be tricky it’s not to say that it’s a bad thing, and done properly can a really positive thing.

It can boost your credit score, and open up the opportunity to purchase things that you just wouldn’t’ be able to pay for up front. As long as you’re going into it with the right attitude (knowing you can afford repayments) and for the right reasons, borrowing money could end up being one of the best things you’ve ever done.

Here are five situations where getting a loan is totally worth it.

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To Start a Business

Thanks to the internet, more people than ever are able to quit their day jobs and become directors of their own company. But starting up a business takes money. You’re likely to need equipment and supplies. You might need to pay for training, hire an office, pay for advertising, licenses, insurance and everything else that comes along with it. Lending money to get you initially set up in business is absolutely worth it.

It’s something that could put you on a new path in life and allow you to follow your dreams. When your business succeeds you will earn back the money, plus a whole lot more so it’s an excellent investment. Finding a good business coach or mentor is advisable if this will be your first business.

You’ll also need to speak to a lawyer, an accountant, and a banker to get everything in order. This will help you to decide on a budget and use the money to it’s best use to allow your business to get off the ground as quickly and successfully as possible.

 

To Study

Spending money on education is never a waste. Whether it leads you directly into a good job role or is just used to help you stand out from other candidates, having some excellent qualifications under your belt is always a good thing.

There are often tuition loans, grants and bursaries available to get people into education- these will depend on where you live and the course you’re studying so look into what’s available to you. Some will be in the form of student loans but others you might not have to pay back at all. If you’re not entitled to any help with money, taking out a personal loan from a site like LendingTree could allow you to book the course that you want. It could be at a university or college, academic or vocational.

Either way, learning new things and gaining qualifications can set you up on a great path for your future career. Or can allow you to completely change your career if you’re a mature student.

 

To Buy a House or Make Home Improvements

When you invest in bricks and mortar you, invest in your future. The property market might have it’s ups and downs, but generally, the value of houses increases year on year. Not only do you have the benefit of not having to pay rent (money you will never see again) but you’re investing in something that’s yours.

Once the mortgage is paid off you have a home to live in rent- free forever. Alternatively, you could sell it to release the equity, or pass it down to your children. A mortgage is an enormous debt to take on but is one that’s completely worth it.

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To Buy a Car

The problem with cars is while you can find some models cheaply, you could end up paying more in the long run. Cheap cars will be older and therefore less reliable leaving you with big repair bills to foot.

Older cars also tend to be more expensive to insure too; the parts can be harder to find and more expensive, so insurers bump the price right up. Plus they’re easier to steal, another thing insurers will penalise.If you’re a newer driver or your insurance is already quite high, this could mean it bumps it out of your price range. Buying a slightly newer model is likely to work out cheaper, it will be more reliable, and you’ll find the insurance isn’t quite as high.

The problem is, this makes the car itself more expensive to buy. If you’re not able to afford it up front, car finance is a good way to go. This allows you to spread out the payments monthly- and while you will pay more overall this way it can mean you’re able to afford a car. Run plenty of quotes through insurance website to find a model that’s good for insurance as well as not being too expensive to buy on finance.

Getting the best deal is a balancing act between affordable insurance and affordable finance. Having a car can open up so many opportunities, so borrowing money to get one is definitely worth it.

It is very important that you choose a vehicle that you can afford. Having your car taken away due to failure of making payments can greatly affect your credit. A repossession on your credit report can stop you from financing other purchases in the future. 

 

To Book Your Dream Holiday

Proceed with caution on this one. Racking up credit to fund an extravagant lifestyle that you can’t afford is a quick way to wind up in serious trouble with money.

However, there are some circumstances where it can be ok. If you’ve always wanted to take your kids to Disney, or visit a particular country with your partner, using credit can allow you to do this.

Providing, of course, it’s fully thought out; you know what the repayments are and are sure you can afford them. If you know you’re good at managing your money and it’s something you have always wanted to do, a loan can make that happen.

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