Refinancing Tips to Choose the Best Loan Deal Available

If you’re considering refinancing, you will inevitably come across lenders who use the term “no cost financing” to lure you in and win your business. However, as you probably suspect already, no-cost financing doesn’t exactly mean that.

Financial_supportSo what do lenders mean by that term? Definitions of “no-cost” financing or refinancing vary from one lender to another. Be diligent about asking each lender what their specific terms are. In general, there two ways you can avoid paying fees up front.

The first way is when the lender will cover all closing costs. However, this means that the interest rate you’ll be charged will be higher. And you will have to pay that rate for the entire life of your loan. Some advice is to ask your broker or lender to give you a comparison of all the up-front costs, interest rate, principal and payments both with and without the trade-off.

As for the second method, that consists of having all refinancing fees “rolled into” your loan. This way, the fees are included in the amount of money that you borrow and you will not be required to make any cash payments upfront. Instead, you will have to repay the fees with interest all throughout the life of your loan.

Our advice is that when lenders offer you a “no-cost” financing solution, they are probably including a prepayment penalty aimed at discouraging from seeking to refinance your loan over the next few years. Always ask a lender that offers such deals to thoroughly explain all the penalties and fees that are involved before agreeing to the terms of the loan.

“Breaking-even”– how long does it take?

It is always important to carefully calculate what your financial benefits are for refinancing in 1-3 years. What are your plans for staying in your home? Compare these factors to determine the benefits.

Basically, if your plan is to continue staying in your house until you pay the mortgage, you will need to find out the total interest that you will have to pay under both your old loan and a new one. How do the numbers compare?

Comparing the equity you would build up under both loans is also a wise move. More of your payment goes towards the principal, helping build equity, if you’ve had the current loan for a long time. On the other hand, if you have a new loan with a longer term than what remains of your old loan, you will find that less of the payments go towards the principal. This will slow down the build-up of equity of your home.

Refinancing calculators

Mortgage calculators available online are very helpful to calculate the effects of refinancing a loan.

financial calculatorThe can calculate the effect of refinancing your mortgage by using online mortgage calculators. Such calculators typically ask for details about your mortgage (interest rate, remaining principal, term of the loan, number of years remaining, etc.), as well as the specifics of the new loan you are considering (interest rate, principal, term, etc.) and the upfront costs or closing costs on the new loan. The best mortgage calculators also require information about the tag and interest rates you can get on your savings investments. They’ll show you how much money you will be able to save versus how much you pay over time. This can help you determine whether refinancing is the best decision for you.

How to be a smart refinancing shopper

It’s a smart idea to take your time when deciding on a home loan, in order to get the best deal available. Shopping around and comparing available offers will ultimately save you thousands.

The first thing you should do is get a copy of your credit report and make sure it contains accurate information. Also, don’t be afraid to let lenders know that you’re looking for the best deal, this will often encourage them to make you a very good offer.

Discuss with your lender first

Your current lender should know as soon as you begin considering refinancing. Since they will most likely want to determine you to stay with them, you might be able to negotiate reducing or eliminating some of the fees involved with refinancing. These are usually fees involved with a title search, surveys, and inspection, but may also extend to include application or origination fees if your current mortgage is new.

So always make sure to tell your lender that you’re looking for the best deal available: they will want to compete with other lenders for your business.

Be a comparison shopper

Always compare all terms offered by different lenders, including costs and interest rates.

Lenders are actually required by law to give you an estimate in three days after they receive your application for a loan. Do not forget to ask about the costs of closing a loan ad well. Make sure to carefully review all documents and compare all loans and their costs. You can even request to see the HUD-1 settlement cost form – you can do that one day before signing the final documents and closing the loan.

We advise you to carefully verify that the rate given by your lender is indeed the rate you will get when signing the loan. You may even ask for a rate commitment or mortgage lock-in put into writing. Also make sure that all costs and obligations are explained before signing your name to anything.

Can You Get A Personal Loan With An Imperfect Credit Score?

Personal loan detailsHad it been a few years back, the answer would have been ‘No’. This is because, with a collapsed financial market in the forefront, no lender was ready to bear the risks of providing loans to people with bad credit scores. But things have changed today. With the market picking up pace at a slow yet steady pace, new-age lenders have now got a whole new range of loans for people with bad credit also. So are they overlooking the risks? Not really, since the higher interest rates are primarily charged to play down the perils involved in the niche, but by and large, they focus more on the needs of the people.

The answer therefore is an ‘Yes’ today, which means that even if your credit score is below average and/or not ‘perfect’ you can get a loan. A specific type of loan called bad credit loans, meant for people having imperfect credit scores have been formulated by certain lenders so that patrons with ‘below average’ or ‘bad’ credit scores are not entirely deprived of credit.

Why are lenders ready to provide ‘bad credit’ holders loans?

When lenders fork out loans to people, they are truly much concerned about the ‘risks’ involved in the offering…which obviously are more when the borrower is having bad credit. But yet still, they are not disinclined to the situation these days since they have found out that many of these people are dependable borrowers, who are just victims of job loss, financial loss or adverse monetary circumstances.  They also feel that this group deserves a chance to reinstate their credit scores by taking a loan, and also procure financial support as and when they need it.

In fact in many instances they have seen that these loan takers are more eager to adhere to stipulated repayment schedules as they are more ardent to rebuild their credit glory once more.

Who provides them?

Loans for people with bad credit are available with loan matching portals that have got bad credit loan programs on their portfolio, and has included in their list niche segment loan providers who specialize in the forte. Such a portal connects a prospective borrower to a suitable lender when the former fills up a form at the website (that explicates his/her loan requirements) and answers certain follow-up questions. For eligible candidates, loan approval takes a minute. It’s a smooth sail and nothing complicated. Rates and loan options can be checked, reviewed and compared by applicants for picking out the best offer.

Interest and repayment terms

Interest for bad credit loans are higher than what is charged for standard loans in the market, but not to the extent of being unaffordable. The key is to choose the right amount and the right tenure, as when a loan is affordable in terms of reimbursement and term, there are less chances of defaulting on its payments. Timely refund rather helps to lift up the credit scores of a bad credit borrower yet again and improve his creditworthiness for future loans.

Too low a credit score might however need rebuilding before you can apply for a loan.

Claudia Martinez is an expert content writer who writes for several blogs and websites including finance blogs.

Understanding Log Book Loans

Log book loans have been around for a while now, but they have only recently begun to gain popularity on a large scale. There are many people who are not entirely sure what log book loans are or how they work. Let’s take a look at the key points you need to know if you are considering this type of loan.

Let’s Talk Basics

Log Book LoansLog book loans get their name because the borrower must surrender their x’s log book as collateral in order to secure the loan. This means that the lender will be able to take ownership of the vehicle in the event that the borrower fails to keep up with repayments. The borrower is still able to use the vehicle as normal during the term of the loan.

Essentially a log book loan works in the same way as any other secured loan. The car acts as security and it is possible to borrow around 75% of the vehicle’s current value. Since the lender has this security, these loans are commonly offered to people who have bad credit which stops them getting loans from traditional lenders.

It is fairly common for interest rates to be a little bit higher than with a traditional secured loan, but not as high as other borrowing options such as payday loans. The loans are commonly offered short term over a maximum of 3 years and do not usually require a credit check.

Meeting The Criteria

Those looking to apply for a log book loan usually need to meet the following criteria:

ñ  Be over 18 years of age – although some lenders do specify that applicants must be 21 years old.

ñ  The lender must be the legal owner of the vehicle.

ñ  The car must not be under any other finance agreement.

ñ  All relevant documentation must be produced at the time of application.


The Advantages of Log Book Loans

Log book loans do come with a number of key advantages. One of the most popular being that they are accessible to any car owner. It does not matter what sort of state your credit history is in or what type of car you own. As long as you can provide the log book and ownership papers, and are in a position where you can meet the repayments you will be considered for this type of loan.

Another of the popular benefits is that the application process is usually very quick and simple. It generally consists of a single form backed up with the relevant documentation. In many cases it is even possible to get a same day decision and get the money instantly on approval. The terms are also fairly flexible with loans offered over anything between 3 and 36 months depending on the total amount borrowed. The loan amount is usually based on the value of your car.

If you are looking for a quick and easy loan, but you do not have a very good credit history then you might find that a log book loan can provide you with an ideal solution. The application process is easy and most car owners are eligible. However, it is essential that you are comfortable with your ability to meet the agreed repayments because if you default on the loan you will forfeit your vehicle.

The founder of Hugh Tyzack is an expert when it comes to loans and finances, if you need help getting a logbook loan click here to find more details. You can find Hugh on @badcreditloans8 and  Google+

Proverbs That Will Help You Financially If Heeded

struggling financiallyAll languages have proverbs and saying that are often repeated and many of them are very common. They are usually snippets of wisdom and advice that will help somebody if they pay heed to them and they cover all aspects of day to day life. Finance is no exception and some very popular proverbs offer valuable advice that will help your bottom line.

Waste Not Want Not

The meaning of this proverb is very straightforward yet still it is often repeated because it needs to be repeated. Many of us are wasting money needlessly and if only we took account of what we are spending when we don’t need to be spending, we could save ourselves a surprising sum. Perhaps you are leaving lights on when you don’t need to or boiling a full kettle when you only need enough hot water for one cup. Perhaps you are buying too much food and having to throw some away often as it has perished before being eaten. Even if wastage may appear to be in very small amounts, small amounts soon begin to add up to something more significant. Tighten up on any wastage that you may be guilty of and you could make a big difference to your bank account.

Don’t Count Your Chickens Before They Are Hatched

When we are budgeting we need to take into account what we are expecting in and it may be tempting to include some items that have not yet been confirmed. If things don’t turn out as expected then this may leave us short of money and having to ask for same day loans or any other source of credit. Instead, only account for what you know will definitely be coming in and that way you will avoid spending money that you don’t have. Budget your potential income sensibly and when some additional income is confirmed it will make a bonus boost to your finances.

Speculate to Accumulate

If you have some money then you could leave it lying around idly until you need it, or you could put it to good use to generate even more money. High-rollers may dabble in the stock markets but you don’t always have to have a lot of money to make wise investments. You could consider looking out for bargains that you could sell on for a profit on sites like eBay or even try making money by selling to friends and family. Play your cards right and you could make a very good additional revenue stream by making the most of the money that you already have. Get it wrong though and you could find that you end up losing out so you will need to find the right balance between risk and reward.

It may be easy to disregard proverbs as cliché catchphrases that people say from time to time but listen to them and you’ll see that they could really be offering some very valuable advice. Pay attention to then and you could begin to see a significant improvement in your financial situation.

If he is in need for financial support than Jamie Finch may turn to payday loans from Uncle Buck Online for help. When doing so he bears in mind proverbs that offer some valuable advice where money is concerned.

Get Instant Approval for Payday Loans without Struggle

applying for payday loanPayday loans are constantly gaining more and more popularity among everyday consumers due to increasing financial pressure from the nation’s economy. People find it convenient to be able to borrow small amounts of money to cover short-term expenses without the hassle normally associated with going to a bank and applying for a loan. Payday loans are quick and simply to obtain, and you can almost always have your money within 24 hours after filling out an application.

Unlike traditional banks which do extensive credit checks and thoroughly analyze all of your employment, asset and income data, payday lenders are much less strict and require you to meet only a small list of criteria in order to ensure you are likely to pay back your loan. If you’re considering a payday loan, here are a few things to think about and a few criteria you will have to meet.

Just How Much Money Do You Need?

This is the most basic question which you will need to answer before seriously thinking about applying for a payday loan. You need to figure out how much money you need to prevent any financial hardships from arising, and also how long you will take to pay that money back. Wise borrowers only take the amount needed and ensure that they pay it back as quickly as possible to avoid unneeded fees from interest and also make sure loans are available when needed the next time.

What Requirements Do Payday Lenders Have?

Payday lenders are each able to specify the rules or regulations that their individual business has in regards to loans, but there is a list of the most common eligibility requirements. Some things to consider are:

  • You must be a US Resident – This ensures that you can legally into a binding agreement with the payday lender.
  • Need to Be at Least 18 – Minors are not allows to enter into a financial agreement on their own without the consent and co-signing from a parent or legal guardian.
  • You’ve got to Have a Job – Lenders will not loan any money to someone who they do not think will be able to repay the funds to them on time. If you don’t have a job or a verifiable source of income, obtaining a payday loan will be quite difficult.
  • You Need a Checking Account – You must have a US-based checking account in order for the lender to deposit the funds into.

Find a Legitimate Company

A dishonest or unethical payday lender can often times put you further in debt with altered terms or added fees. Make sure that you don’t get ripped off by a fraudulent payday loan company. Do your homework, check the reviews of companies you are considering and ask your friends and family if they have taken payday loans from any reputable company.

Do some Market Research

This task is much easier than it sounds and can ensure you get the best deal possible on your payday loans. Choose 5-6 companies which you think sound like really good opportunities and then contact them about their fees, interest rates and due dates. Also check their policies and fines in the rare chance that you are not able to pay your loan on time. After your research, choose your option which seems the most feasible and provides you the most financial flexibility.

Applying and Approval

Finally, you have selected which company to apply for a payday loan through. Don’t worry! It is not a complex or time-consuming process. It is often quite quick and simple; all you need to do is simply fill-out a form (usually online) which will take around 5-10 minutes and then wait for their response. Most of the time you will get an approval within 24 hours or less and the requested amount will be deposited directly into your bank account.

Payday loans can provide fast, flexible options for your personal cash flow, but care needs to be made to ensure you don’t bite of more than you can chew, or borrow more than you can repay.

James McDonnel is a full time finance blogger and an economist. He writes for SwiftMoney and contributes on various online publications. You can find more about SwiftMoney but visiting their site.

Credit Cards vs. Personal Loans: What is Right for You?

The decision for the best method of borrowing money when times are tough depends on a multitude of factors. For some people, getting emergency access to cash may be best done through a credit card, while for others; the best option would be to take out a personal loan. What constitutes the best criteria for this decision making process?

There are four main factors that you should consider before taking on such a decision: mobility, time, additional benefits, and access.


Do you travel around often? People who travel need to worry about security and fraud. Using cash or debit at hotels or restaurants abroad, or even just having it on your person, could expose you to fraud and theft. This is obviously a worst-case scenario, but it is best to be prepared. For this reason, it would be recommended to use credit if you travel frequently. If you get your wallet stolen, canceling your card and getting reimbursed is just a phone call away. Furthermore, credit cards are much more cost when going abroad. You can use them basically anywhere and they will automatically do currency conversions for you. If you are searching for security and traveling cost reduction, than a credit card will be the right choice.

If you are not the traveling type, then this factor will have much less of an impact on your decision-making. Given this, credit cards will generally always be safer than having hard cash.


How much time do you need to pay back your loan? Credit cards can be paid back immediately; you just have to balance the account to zero. Credit cards allow you flexibility when it comes to time. However, if you are intending to not be able to pay the debt back soon, then the interest you will accumulate on your credit card debt will not make credit cards a viable option. In situations where you know you will not be able to pay back the debt for a while, you may opt to take out a personal loan.

Bonus Benefits

What are the perks? A distinctive bonus to opting for a credit card over a personal loan is that you will potentially get access to rewards and discounts, in the form of airmiles, cash back and, promotions at certain stores.  So while you are spending money you would need to be spending regardless, you have the opportunity to get some of it back. This point is especially pertinent to travelers, as airmiles can really add up and save you a ton on airfare. Personal loans will be of no help in the rewards area. Their bonus benefits lie elsewhere.

online personal loanPersonal loans offer you something credit cards cannot: discretion. Once you get the money for your loan. You are free to use it as you please. Whether you want to pay off bills, start a business, or buy expensive jewelry, no one is going to object. Credit cards, however, are monitored by your bank and can therefore have a limited scope of spending diversity.


How easily you can have access to the money? Personal Loans are relatively easy and fast to get. They have very little paperwork, and there is no need for collateral. This is providing that you have a good credit score. Because of how easy it is to get a personal loan, creditors want to be relatively sure you can pay it back. If you have a bad credit score, you can forget about getting a personal loan.  The prerequisites for applying are pretty strict and predetermined so there is very little wiggle room when it comes to qualifying. Personal loans will generally offer lower APR rates for the reason that you have to have a good credit standing to even qualify.  Credit cards are easier to get if you have bad credit, but you will be restricted financially in the form of a monthly credit limit.


Credit Card People

  • Travelers
  • Frequent Flyers
  • Small time frame for paying back
  • Bad credit rating

Personal Loan People

  • Good credit rating
  • Need for Discretion
  • Freedom to pay back debt over longer timeframe

Hugh Tyzack is Managing Director and founder of GBP Loans Limited, which was formed in 2008. GBP Loans specialises in no fee Guarantor Loans. GBP Loans has been a driving force in trying to eradicate bogus fee charging and is now one of the UK’s biggest providers. You can find more details here. When he is not writing the Blog, Hugh enjoys listening to music and playing the piano. Follow Hugh on Twitter @GBPLoans and also on Google+

Image Source : 1&2

The Best Car Loans Are Yours for the Taking

The Best Car Loans Are Yours for the Taking

Ah, cars! Don’t we all have a romance going with them? You probably still remember your first car. The colour, the upholstery, the smell-everything! Over the years you must have purchased many cars, and you have probably developed a bond with each one of them and were loath to see them go. Surely your love affair with cars must be an ongoing affair, and you may be already looking forward to your next buy.

Your options for car finance

However, buying cars being an expensive affair, you would be anxious to know about the availability of finance. Well, given the current economic scenario, a Car Loan 4U may not be as easy and straightforward an affair as it was in the past; but you can still avail of some great offers, if you take the trouble to do a bit of research. Some of the best car loan offers in the UK can be found on the Internet. This is an increasingly popular option, because, not only are the rates of interest low, you can avail of these loans from the comfort of your home or office.

Not only are online car loans cheap, you can also do a good comparison and select the option that suits you best. What’s more, these websites will also let you choose from amongst thousands of cars. So in a way, you are really going to be spoilt for choice. Even if you have bad credit, you can avail of a car loan. What you need to do is to offer your car as collateral. So in case you default, you car can be given to the loan company in lieu of the due money.

However, just because a car loan is available, it does not follow that you have to jump at the offer. You have to see if it works for you or not. Given below are a few things you might want to keep in mind while deciding to take a car loan:

  1. Go for loans with lower Annual Percentage Rate; the lower it is the better it is for you.
  2. Get to know if there are any hidden costs involved.
  3. Find out the total amount you will be paying apart from the Annual Percentage Rate.

Once you have determined that you have a good car loan offer in your hands, you can now get down to the task that you enjoy the most: driving home the car of your dreams. The recent economic troubles may have dampened people’s enthusiasm a wee bit for buying new cars, but the fact of the matter is that you can still go out there and get some pretty decent car loans that will enable you keep your love affair with cars as alive as ever.

So the next time you see that sleek set of wheels in a showroom, don’t just sigh and pass by. Try and see if you may just be able to drive it home. With loans still available so readily, that shouldn’t be too much of a problem.

Peter Dunn is a car fanatic and an avid blogger. He recently wrote an entire series of blogs on Car Loan 4U.

Image credit:

Things You Must Know before Applying for a Personal Loan

Things You Must Know before Applying for a Personal Loan

Planning to buy your son a new Mac book on his 18th birthday? Thinking of gifting dear wife an expensive solitaire this anniversary? It is these little moments and fulfillment of the dearest desires that make life worth living. But the money issue can ruin these little moments. Don’t let finances spoil your dream moments. Wondering what to do? Well, the lenders are ready with personal loans. Yes, you can apply for such a loan to fulfill the most private ambitions you have.

Why is it advantageous?

An example would make it much easy to understand. For instance, education loan – you know how cumbersome is the whole process of getting the same sanctioned. Numerous forms have to be filled up, too many documents to be produced. You also have to provide suitable collateral; in a nutshell, too many things to be done before you get the cash in hand.

Actually, even the lenders can’t help it. In most cases, the amount involved is so huge that without checking and cross checking your ability to repay, the lender won’t sanction the loan. In sharp contrast, personal loan amounts are usually moderate. Hence a scrutiny of the borrowers’ credit record is good enough for the lender.

Who offers a personal loan?

When you’re contemplating applying for a personal loan, there is no shortage of lenders. Most, if not many offer such loans, in fact there are a good number of schemes that you can choose from. What is perhaps even more convenient is that there is the option of online application. In case of online cash loans, verification is done over the phone and the relevant documents have to faxed, of course you have to fill up an online application form to begin the entire process.

However, it is suggested that you approach a lender who knows you well, that is you have an existing or a past relationship with the latter. Such a lender would know your credit history as well as you do and the lender would know whether or not you’re reliable as far as repayment is concerned. A pre-existing relationship improves the chances of approval. Besides, there is the scope to further improve the bonding by on time payment of interests and other dues.

Which points a lender considers?

What is that the lender looks at? The answer would be your income status. This is the first and foremost document to be scrutinized. Credit score is also important to some extent, though, not mandatory.

Usually no security or collateral is needed and so personal loans are often referred to as unsecured loans. This is not same as like short term loan.

The lending institutions look at a couple of other things and those are,

  • Your source of income, how stable the source is. It is preferred that you stick on to a job for a good period of time before applying for the loan.
  • Another thing that is scrutinized thoroughly is how much and what assets you own.

Undoubtedly the entire arrangement is really convenient. If you have a steady source of income and at least a moderate credit score, then you’re very likely to be eligible for short-term personal loans. However, such a loan is expensive – the interest rates charged are pretty high. Therefore, apply for one only when it is absolutely urgent.

4 of the Greatest Accounting Scandals of All Time

4 of the Greatest Accounting Scandals of All Time

Accounting scandals involve misdeeds by trusted executives who are responsible for large sums of money. They come up with devious ways to misuse or misdirect funds, understate expenses and liabilities, overstate revenues and the value of the assets. In no particular order, here are four of the greatest accounting scandals of all time.

Bernard L. Madoff Investment Securities LLC

Bernie Madoff, a former NASDAQ chairman, orchestrated the biggest investment scam ever and had $21.2 billion in cash losses. It was a giant Ponzi scheme rubber-stamped by his accountants and aides. His accountant, David Friehling pleaded guilty to several charges of false audits. The main assistant who helped Madoff pursue his Ponzi scheme was Frank DiPascali. He also pled guilty to creating false trade orders and has been sentenced to 125 years in prison.

A Ponzi scheme pays investors from money given by new investors and not from profit earned through investments made by the company or organization. To attract new investors, the people running a Ponzi scheme promise much higher short-term returns than the investor could get in legitimate investments.

Lehman Brothers

The accountants at Lehman Brothers lost more than $50 billion in disguised loans. They classified these loans as sales. The executives and auditor Ernst & Young manipulated the balance sheets by using an accounting trick called Repo 105. A top law firm in Britain helped Lehman Brothers hide its debts by signing off on questionable accounting techniques in order to disguise the $50 billion debt.

Repo 105 is an accounting ploy to classify a short-term loan as a sale. The cash that is received from this so-called sale is used to pay down debt which allows the company to appear to reduce its leverage. It pays down its liabilities temporarily, so the published balance sheet looks good. After the financial report is published, they borrow money and purchase back their original assets.


Enron was once the seventh largest company in the U.S. In 2001, it collapsed because the executives used special purpose entities so that large debts would not appear on their balance sheets. This was the biggest accounting fraud of all time at the time. This false financial reporting hid the company’s true financial position from shareholders and analysts.

The unscrupulous executives including Jeffrey Skilling, Kenneth Lay, Andrew Fastow and others kept their multi-billion debt off the books and the firm was portrayed as having a positive financial footing. When it fell, Enron was the largest bankruptcy ever at that time. The leading auditor Arthur Andersen, who audited Enron’s books, was dissolved. They looked the other way when they saw misdeeds and also shredded evidence of the scandal.


The executives at WorldCom organized an $11 billion accounting fraud scheme where Bernie Ebbers, the former CEO, took hundreds of millions of dollars in personal loans. At one time, WorldCom was the second largest long-distance operator in the U.S. Ebbers masterminded an accounting fraud that was the largest in U.S. history at that time.

Ebbers needed to keep World Com afloat because his personal wealth was based on shares in the company. He borrowed from the company to buy more stock as well as mansions and a hockey team among other things. He used hidden expenses, phantom revenue and hype to inflate earnings and perpetuate the illusion that the company was financially healthy. Scott Sullivan, the former CFO, pleaded guilty to conspiring with Ebbers to submit false reports to investors as well as regulators to hide the fact that WorldCom had weakening results. Not only did they use fraudulent and sloppy bookkeeping, they also overvalued several acquisitions and instead of the profit they reported, they had a total of $79.5 billion loss.


Larry Parker is a corporate accountant and guest author at Best Accounting Schools, a site with rankings of top-rated accounting schools.

Why should you Borrow to get ahead when using Debt Leverage?

Why should you Borrow to get ahead when using Debt Leverage?

People borrow money for every reason. Whenever they need money, they look towards banks, friends or financial institutions to help them. However, the reason for the loan is not always justified. People take loans for all sorts of crazy reasons – a party, an outing and other unnecessary expenses. These reasons might be unjustified; however, there are some really genuine reasons that call for one to go under debt.

Debt looks unnecessary, but there are cases where there is no way out but to take a loan. Some of those conditions are given below, explaining when and why you should borrow money to move ahead in life.

To Save Your House

A great number of houses are mortgaged in the US. People are living in the fear of losing their homes to their lenders. This is one thing that scares all home owners. If you are facing the risk of foreclosure, then taking out a loan to paying back your debt is a good option.

However, this is not the only option that one has in such situations. One should always seek help from a lawyer who specializes in such cases to find the best option out of this situation. One more thing to remember is not to make the same mistake of putting another property on the line to save one property, as it will not do you any good.

Almost, all the banks will require some kind of collateral to give you a loan; however, some companies or lenders might be willing to give you a loan to save your house on certain conditions. This option should be used when you are sure that you will not end up in trouble.


If an investment opportunity comes your way that can benefit you, then taking out a loan is a good idea. Risks are important in life and one can never move ahead in life without taking risks. However, one thing that is important is to minimize the risks involved. This isn’t easy but one should be able to do it before opting for loan.

Foresightedness is required as these are very major decisions and cannot be made in haste. You can consult a professional or your friends to make sure the step you are taking is worth it. Not every investment gives the desired returns and can at times put you in serious financial trouble.

One more thing that you will need to do is find the difference between the profit you will earn out of the investment and the interest you will pay on the loan. If the profit isn’t more than the interest, then the option is pointless and something that should be totally avoided. However, if good returns are guaranteed then this is the best thing to go for.

Debt Consolidation

Debt consolidation to pay down higher interest rate loans is a good reason for taking out a loan, especially if you are sure you can manage it well. If you are already burdened with a loan that required you to pay huge interest, it is a good option to take a loan from a friend or a bank that is giving it at a lower interest rate so that your burden is reduced.

However, it should be managed well as it can, like any other loan, cause problems. Also, when you go for this option, make sure the terms and conditions of the second loan are friendlier than the former one, because if they are the same then going to another lender will not be a good idea as it will not help you in any way.


Loan for education is usually acceptable; however, it depends on many factors. Firstly, consider whom you are going to sponsor for education, and if the person is worth it. There is no point in taking out a loan for someone who isn’t good at school, as the person probably will have difficulty finishing college, graduating, finding a job and then paying back the loan. However, this is very difficult to conclude due to the desire and importance of getting educated.

Many institutes and colleges have their own debt programs that are often interest free to promote education. This option should be considered as it can be of great help.

%d bloggers like this: