7 Reasons Not to Get a Personal Loan

[Aug 5, 2010.]

 

Even if you have good credit and can qualify for a personal loan, that doesn't mean you should apply for one. Borrowing money can have a serious impact on your finances if not handled properly. Here are 7 reasons not to get a loan.

1. To buy the latest gadgets, even though you don't need them. Sure it's fun to test out the latest technology, but going into debt to keep up with trends doesn't make sense.
2. To loan money to family or friends--especially if you know they won't pay it back. There's nothing wrong with helping out your loved ones, but don't go into debt to do it.
3. To take a vacation you can't afford. Everyone deserves some rest and relaxation from time to time, but is it really worth it to take a week-long trip that you'll spend years paying off?
4. For lottery tickets, casinos, or other forms of gambling. Borrowing money to gamble is a sign of a serious problem. Skip shopping for a personal loan and instead look for someone that can help you deal with a gambling addiction.
5. For expensive club memberships. Don't feel obligated to join a golf, tennis, health, or other type of club just to be part of the so-called in crowd. Find activities and hobbies--and friends--you can enjoy without borrowing money.
6. For purchasing risky investments. There are all kinds of investment pitches aimed at separating you from your money. Investing wisely can help you build wealth, but take time to pay down debt before you start taking a lot of risks with your money.
7. To keep up with your friends. Don't feel compelled to compete with your friends by trying to outdo them. Live within your means and save up for splurges. Besides, many of the people you think are living fabulous lifestyles may be taking on a lot of debt to appear affluent.

Evaluating Personal Loans

There are times when getting personal loans can make sense, such as to consolidate debt or pay education costs. Just avoid borrowing money for frivolous purchases that you'll be paying back for years. Also avoid getting a loan if you know it is going to be a struggle to make the monthly payments.

If you feel that your reasons for borrowing money make sense, you can begin comparing personal loan quotes here.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.