Cash Loans Good Or Evil

Cash Loans Good Or Evil



Cash Loans: Good Or Evil?
What a​ popular and complicated question! I​ am going to​ attempt to​ answer this with as​ much clarity and utility as​ is​ possible in​ a​ one page article .​
First I​ want to​ cover the​ questions that you​ must know the​ answers to​ in​ order to​ make a​ good decision on​ getting cash loans .​
They are (in no particular order): 1) do you​ have sufficient funds to​ make the​ payment on​ time and with money left over in​ case of​ emergency?,​ 2) is​ the​ thing that you​ are buying either saving you​ money somewhere else or​ making you​ money that is​ more than the​ amount that you​ are paying for interest?,​ 3) how much is​ the​ thing that you​ are buying going to​ be worth when you​ are done making payments?,​ and 4) are there any sorts of​ deals that you​ can get that will enhance the​ value of​ the​ loan for you? I​ want to​ use the​ two classic examples of​ new cars and houses that people use financing to​ purchase.
So the​ first question is​ purely a​ common sense type of​ question and can only be answered honestly with respect to​ the​ amount of​ money that you​ make .​
Basic guidelines would be that you​ should be spending no more than 20% of​ your budget for everything that has to​ do with shelter and 20% for every thing that has to​ do with budget .​
This brings up the​ important point that you​ should always be taking into account the​ fact that with a​ house and with a​ car there are regular expenses that come with both .​
Now there are ways to​ make the​ payment for cash loans less up front so that it​ eats up less of​ this 20% and we are going to​ discuss that in​ the​ following paragraphs.
Secondly,​ there are certain investments that when paid for with cash loans can be used as​ tax benefits .​
For our purposes the​ house represents this type of​ investment where you​ get a​ tax deduction for the​ interest you​ pay on​ the​ house .​
This deduction allows you​ more room to​ make money with the​ money that you​ save by not paying for the​ house straight up .​
I​ am talking about investing this left over money in​ a​ place that you​ are actually making more money on​ than you​ are paying in​ financing the​ loan .​
Cars offer no such advantage.
Number three you​ must consider the​ lasting value of​ this investment .​
In my opinion this is​ the​ very reason that buying a​ new car is​ a​ bad investment in​ general and that does not even take into consideration the​ finance charges that you​ will incur .​
It is​ very possible because of​ the​ large depreciation that happens immediately you​ will end up owing more for the​ loan (if you​ want to​ sell before the​ loan is​ up) than you​ can get for the​ car .​
Houses depending on​ the​ market and the​ types of​ improvements that you​ have to​ make may be a​ very different story,​ as​ they generally appreciate rather than depreciate and paying for them (with cash loans) is​ more acceptable.
Lastly,​ and this actually applies to​ both though I​ really am against buying a​ new car in​ general,​ you​ may be able to​ get deals that make cash loans more attractive .​
This really depends on​ the​ economy especially in​ the​ sectors of​ cars and housing for our discussion .​
The deals often will give you​ a​ fantastically low and affordable rate,​ or​ allow you​ a​ certain period that is​ same as​ cash .​
This simply means that any money you​ pay on​ the​ loan for a​ specified period of​ time will go directly toward the​ balance as​ there is​ no financing charges adding up.




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