A loan should always be considered carefully and only taken out if there is sufficient financial backing. Nowadays, hardly any bank lends to people who cannot have regulated financial circumstances. However, there are also banks that deliberately attract people who are financially weak and for whom a loan only means further indebtedness and financial burden. For this reason, you should always first consider the personal financial situation, compare income and regular expenses and consider whether the loan is really necessary, as there are often alternatives to the loan that keep the financial burden low. The most common motivation for taking out a loan is the acquisition and financing of larger wishes or necessities like a car for the daily route to work, a new home furnishings after a move, the financing of one vocational training or a course of study as well as financing for special requests.
Is loan really necessary?
In most of the cases listed here, a loan is not really necessary, as there are other ways to fund these things without getting into debt in the long run. For a large part of the training, the state offers an alternative to bank loan through grants such as German Credit Fund or the training loan. These grants enable good financing without the risk of debt. Cars or furniture can also be paid off in tolerable monthly installments without having to take out a loan that allows immediate payment, but is a greater burden. If you want to fulfill bigger wishes, you should rather put something on the high edge every month instead of taking out a loan.
Old loan first
If debts already exist from a previously taken out loan or the financial situation does not allow any leeway due to debts, you should generally refrain from a new loan until the existing debts have been completely paid off. In most cases, however, the repayment takes a long time. During this time, new situations can arise unexpectedly that make a loan almost impossible. If such a case exists, it is advisable not to contact the bank directly, as this will usually advise a loan, but to seek advice from an objective financial advisor.
They can quickly determine whether taking out a loan is in your favor or at your expense. If there is no other way, you should inform yourself about the loan offers of various banks. A low interest rate and flexible repayment options are important. Numerous test reports can also be viewed online. This way you can take advantage of other borrowers’ experiences. A financial plan is mandatory for debt in order to keep an overview and to take possible risks into account. You should also document your income and expenses and find ways to reduce expenses.