Almost everybody has had the chance to buy something that was not enough money at the time. There are many who, in this situation, tend to postpone the purchase (or to cancel it altogether), but there are some who do not expect to buy, but rather to solve their lack of money with a loan.
The latter decision may be based on both the need and the convenience. There is a situation where someone has no choice but to take out a loan, but there are many occasions when it can be said about buying, in which case borrowing is motivated not by necessity but by increasing comfort or pleasure. In this post, without financial terms and computations, we try to separate the necessary and unnecessary credit cases in a lifetime.
Let’s see three examples. In the first, Eva lives in a fairly poor village. You’ll find a well-paid job in a little farther city and offer her a job. Eve can only get to work and then go home in the evening (even if she may have to work overtime) when buying a car. Since his salary so far has not been too high, he does not have the savings to buy the car of his choice, so he borrows to take on the job.
In our second example, Joseph would like to surprise his family with a new television set for Christmas. Although it works perfectly now, you know how happy your kids are with a multifunctional and larger screen flatbed. As he took out a loan for last year’s holiday, he knows what to expect, and so far his repayment has not been a problem for him.
Finally, Szabóék’s example, where István lost his job at the age of 61, and has not been given a new job since then, and his wife, Margaret, has been unable to work for her health for years. Municipal social care is not enough for their livelihood, their money is no longer saved, and there is no money left for the drugs and the overhead and food if they don’t get a loan.
In the three examples, we can find different life situations, different financial circumstances, but in all three examples they want to borrow money. Let’s examine the need for loans and the responsible nature of decisions.
At first, it may seem that Joseph makes a responsible decision, because he knows exactly what conditions he can expect and that he will be able to repay his salary. In fact, however, Joseph does not need the loan, does not satisfy an indispensable need, but spends on luxury. Because repayment is not a problem, your decision may not seem irresponsible, but an unexpected event (loss of a job, increase in interest, or a truly unexpected higher expense) can change that too.
There is no doubt that in this example, Szabó needs money to make a living. But hardly a loan will solve their hopeless financial situation. Indeed, it is likely that it would only worsen their situation, as they do not see how they will be able to repay, so they could easily get into a debt spiral. That is, they need money, but not a loan, they have to find a different solution to their lives.
On the other hand, we can say that you need a loan and probably make a good decision if you properly consider all the circumstances. Because he buys a loan to buy a car from that car that would fail without the car (and the loan). You will be able to keep your car up and pay your loan from your higher salary – and you will also love your job even better.
Who needs credit? It always depends on what you want to spend on the money you have borrowed, and your financial circumstances allow you to repay it. Of course, the loan always has a price, you have to repay more than the amount of money you have taken. It is therefore advisable to borrow only for a thing or a loan you need when you really need it. In any case, it is necessary to consider whether it is worthwhile for us to pay more in the future and to give up another thing in return for now getting the desired thing. Then the loan will be a good solution if we pick up what we need or invest in our future (for example, an apartment, a student student loan), and otherwise we don’t have enough money left in it.