Why You Should Not Buy Liabilities With Personal Loan

[Mika]

The purpose of a personal loan is to help you manage your personal expenses.

If you want to rebuild your garage but you don’t have money, you get a personal loan to rebuild the garage. You have not been able to get an operation due to the lack of money, you get a loan and use the money to get an operation. If you don’t have money for furniture, a personal loan can come in handy. There are so many ways to use a personal loan.

If you have decided to get personal, you will have to remember one thing, never use a personal loan to buy liabilities. Let’s say you got a personal loan and bought a car. Sadly, you lost your job. What would you do in a situation like this? Therefore, a better approach is never to buy a car with a loan and continue using a public vehicle.

Why do you have to remold your kitchen with a loan, why not save money until it will be enough for kitchen remolding?

Never buy liabilities with a loan.

 

[Abigael]

This is very true. It is best to never use loans to buy liabilities. In my understanding, liabilities are those things that are not really of much importance. They don't help you earn something, they are just for luxury and enjoyment.

Those things are better bought from your own earned money and not using a loan. This is because you have not really planned on how you are going to pay it back.

Most of the time, you take a loan to buy a liability just because you could not control that urge. So you better learn to say no to your urges, learn to delay gratification and work hard to earn the luxuries you need.

Personal loans are meant to help you with personal finances that you already have a plan on how to get it. So whenever you take the loan, you already know how to pay it back on time.

 

[Mango9]

Yes before you buy anything with your money or with a loan you should check if what you are about to buy is worth it or not don't spend time and money on things that has no benefits or things that will put you in more depth, before you decide you should take time to make enquiry to avoid miss fortune

 

[Jasmine]

You should not buy liabilities with a loan, that's true. However, you must also realize that for a lot of middle class people, especially the lower middle class people, it is not possible to buy a lot of things with their own money, therefore, they end up buying liabilities with a loan. Life is not all about eating, sleeping and going to work. Life is also about having fun, enjoyment and things like that. Buying a car through a loan means buying liabilities because you not only have to pay your car loan but also spend money to maintain the car, does this mean I should not buy a car even if I can pay the car loan in 2-3 years with my income? Does this mean I am not supposed to drive a car because I cannot pay at once? You can buy anything you want as long as your debt repayment is less than 10 percent of your monthly income and 20 percent of your yearly income.

 

[Shaf]

Using personal loans to buy liabilities is one of the poorest personal finance decisions. Sadly it's a lot more common than we care to acknowledge.

I know of government workers who take loans from cooperative societies just to buy expensive cars, not because they need it but to impress others. That's the crux of the problem. Most people purchase liabilities with loans just so that they can impress others with their wealth and glamour.

It's not even advisable to use your earnings on liabilities that add no value to your life. This money can be saved and invested properly to yield more returns. In the long run, you can use the profit from this source to finance whatever liabilities you want.

One way to solve this is to wait, at least a week and up to a month. If you can still do things normally without stress, than that item is not so important.

Another thing is to develop the habit of not taking loans for anything. For some people, it's a habit that becomes hard to break.

 

[Holicent]

You should not buy liabilities with personal loan. It is not a good idea to use your personal loan for paying for any debts. You need to look at the total amount of debt and see what the interest rate is on that debt. If you are going to pay off those debts with your personal loan, then you will have to pay more than what the interest rate is on that loan.

The first reason why you should not buy liabilities with your personal loan is because it will make it very hard to pay back the loan. When you have a lot of debt, then there are many different things that can happen. One of them could be that they will foreclose on your house or they could take away all of your assets like cars and other items. Another reason why it is not a good idea to use your personal loan for paying off debts is because if something happens and one of those debts gets paid off early, then it could cause problems down the road when it comes time for paying back the loans.

 

[Suba]

Interesting thread @Mika Although it may apply to me not to buy liabilities with a personal loan. However, it seems that this recommendation does not apply to civil servants, who are unlikely to be laid off or become unemployed, unless they make a fatal mistake. Most of them buy houses, cars and luxury equipment by borrowing money from the bank, while the loan repayments will be automatically deducted from their salary. But we have to be careful and avoid, especially for those of us who don't have financial guarantees for tomorrow, don't be easily tempted by PayLater offers on the marketplace, we also have to avoid online loans that offer various conveniences and low interest.