Sometimes banks and loan companies get a bad rap. Mostly because people will misuse or abuse their services and don’t take personal responsibility for their finances.
But that doesn’t mean the types of financial products they offer are a bad thing. It’s all about moderation and making smart financial decisions.
In fact there are many businesses, schools and personal endeavors that never would have happened if we didn’t utilize getting a loan.
Yes, in a perfect world, we’d always be able to find the best personal loan deal, not make mistakes with our money and save up enough to pay cash for everything.
But this isn’t always the case. Luckily, there are times when getting a loan can help your finances work for you.
If you financed your car through the dealer or have a high interest rate on your current loan, you can use an auto loan refinance to your advantage.
This is something I did when I started aggressively paying off debt, because refinancing to a lower rate can save you money on interest fees, as well as cut back on the time it takes to repay the loan. Plus, it might make your monthly car payments lower to increase cash-flow.
Credit cards can come with outrageously high interest rates that can make paying off your balance a never-ending process.
However, a lot of companies will offer a promotion where you can transfer your existing high interest rate balances to a 0% card, thus saving you tons of money in excess fees and charges.
This is another method I used, to jumpstart my debt repayment journey! Instead of paying extra money to the credit card company, you can keep more of your funds for saving or paying off debt. It’s another smart way to make a loan work for you.
Mortgage Home Loans
Like auto loans, taking out a mortgage loan can be a smart idea because it’s secured by an asset you own. Generally your home will increase in value over the years, so it’s considered an investment into your future.
Right now, the average interest rate on a mortgage loan is at one of the lowest it’s ever been. This makes it the perfect time, to make a home loan work for you.
For example: If you’re able to steadily payoff your mortgage while maxing out your Roth IRA or 401(k), you could actually earn a lot of money – since investments tend to yield more interest than your mortgage loan might cost you.
Is Using a Loan Right for You?
When you’re trying to get your finances in order, it’s always a great idea to use a loan calculator, so you can conservatively base your decision on how much you need and how soon you can pay it back.
Using loans to your advantage can sometimes be a good thing. Just be sure to always do what’s best for you and your financial situation.
Have you ever used loans to make your finances work for you? Name another example of when a loan has benefited you.