Everyone sometimes comes at a time or has had a time when things are going a bit less financially. This is of course very annoying and can cause a lot of stress. Stress is one of the biggest causes of illnesses and therefore it is important to prevent this as much as possible. That is why it may be a good idea to borrow some money as soon as it is financially impossible to solve. But if you ask yourself the question “How much can I borrow?” – do you know the outcome?
When should you borrow money?
Borrowing money is often considered bad because it is not free and you pay with money that is not yours in principle! Yet it can be more convenient to borrow money from time to time than the financial burden just gets bigger. Because that costs you a lot more reminders etc. It may be wise to borrow money but when actually? Borrowing money should not apply if you structurally spend too much. Then the spending pattern must change or it must be looked at how the fixed costs can be reduced. Borrowing money is wise when you have to do a large expense but cannot cough up this money in one go.
How much money can I borrow?
The amount to be borrowed depends on a number of factors. Namely your income, living situation, marital status and the employment in which you work. All these factors influence the total loanable amount. Incidentally, this is also different per loan provider. For example, you will be less likely to get a high loan from the bank than from a commercial agency. This has everything to do with the interest and the conditions.
The interest rate of a loan has an enormous influence on the choice of whether or not to borrow. You want to borrow as cheaply as possible. With a revolving credit loan, the percentages are between 4 and 9 percent. The percentages for a personal loan will vary considerably. This can vary from 1 to 15 percent. A company that charges 14 percent interest will therefore also want to lend a high amount faster than a company that uses 2 percent. The interest rate is of great importance since it influences the number of years you have to pay off. For example, if you borrow an amount of 45,000 USD and the interest rate is 7 percent, you will have to pay 3,150 USD in interest. If you have agreed on a term of 8 years, the interest will still cost you 393.75 USD per year. Interest can also be charged on the outstanding amount while it remains open for longer. Fines can be levied on unpaid or late paid bills, so in the end you can spend quite some money on borrowing.
Conditions of borrowing money
Every body has its own conditions for borrowing money. This can even differ per person within the body. For example, if the neighbor can borrow 56,000 USD and pay it off in 20 years, you may have to pay the same amount in 15 years with the same provider. This may be because your income is higher, you have no wife or children and the neighbor does etc. Countless factors apply to this. When borrowing money it is therefore important that you know what the conditions are and see whether you can also comply with these conditions!