When should you avoid getting a loan?
Vacations, Honeymoons and Weddings
There is no reason to take out debt to fund a vacation, wedding or honeymoon. After all, you’re paying for the vacation for several years after you’ve taken it. A personal loan for vacations can lead to terrible financial habits such as living beyond your means. If you cannot afford to take a vacation on your own, chances are you really can’t afford to pay on loans.
Medical Bills
When you’re hit with a massive medical bill, you may think that taking a personal loan is the best option. However, there are several things to consider before you take out a personal loan.
First off, many hospitals are willing to create a payment plan that allows you just to pay the amount you owe and no interest.
Secondly, medical bills can be filled with mistakes, which means you can negotiate your bills. If you take out more on a personal loan than you need, you’re paying interest on that amount.
Auto Purchase or Refinance
If you’re buying or refinancing your vehicle, you should not take out a personal loan. Instead, consider getting a traditional auto or refinance loan. These loans tend to be secured – by the car – and come with lower interest rates than you can get with a personal loan.
