Is taking a loan good or bad?

Picking a side to what is considered good or bad might be a hurdle especially when the metrics are not plain for both. Coming from the sense that tools are what they are in their true sense, a tool, and nothing more makes these terms an independent entity and void of characterization, since its final result is a proceed from how best it is utilized. 

Words have been termed to be a sensitive tool, as it has birth life as blessings, likewise has it shattered lives as curses. Water, on the same pedestal, has been a blessing to mankind, from irrigation, consumption, hygiene, and social works, likewise a wheel of adversity in the time of flood and storm, my point? Can we truly put a tag on whether a loan is good or bad?  

In today’s read on loans, we will start by considering if taking a loan is good or bad, and we shall furthermore consider why loans are said to be bad or good, amongst other interesting sub-topics for your education. 

May I ask what the motive for seeking a loan is? If you have the answer pretty quick, have you also considered the payment spread and how convenient? While you’re at that, could you confirm to yourself in all honesty if the loan request will be beneficial to you as an asset in the long run or if it is just a cure to a pending lifestyle? 

If you have read the first three paragraphs, likewise can you answer all these without issues, or lying to yourself, then I can proceed to tell you that taking a loan is not a bad idea, however, the intent of the loan is more germane than what is good or bad. If a loan is sought out with the intent of getting returns that can sort the interest accrued without any challenge, and at the end of the tenure the borrower still makes some profit for keeps, the loan is considered good debt, compared to a bad debt which is the reverse as we see with people around us. 

There are many benefits of taking out a loan over other forms of credit. Below are some advantages we considered that loans could benefit you. 

1. A bank loan permits you to repay whenever you choose as long as you make your instalments on time. Unlike an overdraft, which debits everything at once. Alternatively, a consumer credit card with a limited limit cannot be used all at once. 

2. When it comes to interest rates, bank loans are typically the most cost-effective alternative when compared to overdrafts and credit cards. 

3. With a credit card, you must share earnings with shareholders when you raise equity financing. However, you do not have to share earnings with the bank if you use a bank loan to generate funds. 

4. When the loan is for commercial reasons, the government makes the interest payable on the loan a tax-deductible item. 

1. It takes time and several pieces of paperwork to document. 

2. Loans could get addictive when you know you have a facility. 

3. Being addicted to loans could encourage poor saving habits. 

4. If a loan is missed, it may ruin one’s credit report, and sanctions could come with interest or more depending on the issuer’s terms. 

5. Loans are not governed by a uniform rate; hence the interest rate could differ between issuers or private owners. 

6. If the intent of a loan is not beneficial that it pays the interest, a loan could be termed a bad loan. 

Personal loans can be called bad loans when it harms your credit report. This is such that existing loans are not paid back on time. This alerts lenders to the possibility that you are a credit risk. Borrowers may also be concerned that loan payments would leave them cash-strapped. Make sure your payment does not put a strain on your budget. 

In conclusion, a loan is only as good or as bad as the motive tied to it, likewise the credit report assessment confirmed by the credit bureau or loan issuer.