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What are the right times to take out a loan

When we hear the word loan or “utang”, we often think of something negative. For most of us, taking out a loan is a bad financial decision and only contributes to a vicious cycle where you take out a loan to pay for a loan.

But the truth is, it’s perfectly okay to borrow money, especially when it is done correctly and for good reasons, such as leveling up your skills or obtaining things that bring more value to your life, such as a home, car, or even a business loan.

For example, if you’re thinking of setting up a small business in your community, you would need some capital to build your business and buy some inventory.

A loan can also help you achieve short and long-term financial goals like securing the additional amount you need for a downpayment for a new family car, or additional funding for education.

A loan can also help augment or supplement your current income when your savings are not enough to cover the cost of a big-ticket purchase.

A loan essentially provides you access to additional money that your income could not cover at a certain time in your life. And since it is borrowed money, you need to be able to pay it back based on a chosen schedule.

The longer you need to pay back a loan, the higher the interest or the total amount of money charged on top of the original amount you borrowed.

These are other times that you will need a loan:

Securing your children’s future. If you have children, your savings may not be enough to cover for their college education. So an education loan can help supplement your income, and thereby manage your budget.

Loans covering an emergency. First, an emergency fund should cover any emergency expenses. But if that’s not enough, a loan can be made to fund unexpected events in life due to medical and non-medical emergencies, such as natural disasters.


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