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Loans
Loans are a huge financial commitment and responsibility, but sometimes they’re unavoidable. Understanding how loans work and what amount to budget for is the only way to avoid financial problems.
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Loans are a form of debt — there’s no way around it. When you take out a loan, you owe a lender the principal of the loan, as well as interest. Not all loans are bad — often they’re necessary when we want to make a big purchase — like buying a home or a car. To be a smart and savvy borrower means knowing when and how to use loans and how to manage loans in re-payment.
Car loans
Few people buy cars with cash. If you have to buy with a car loan, borrow as little as possible. Pick a loan that has a shorter term, so you pay it off more quickly. Also shop around for the best interest rates.
Home loans
Unless you have a pile of cash available to buy a home, you’ll probably end up with a home loan. A mortgage is a great resource for homeowners, but it’s also big financial commitment.
Other loans
Other loans are high interest loans designed to help you get cash or buy things quickly. They may seem useful, but they’re extremely dangerous. Often, they result in more debt.
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