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6 reasons not to get a personal loan

[Jun 17, 2011.]


Borrowing money just to buy stuff should never be your first course of action. It makes more sense to save up for the things you want. But there are times when you may really be in a pinch and find yourself looking for a personal loan. Just make sure that you are getting a loan for the right reasons, not just because you can. Here are six reasons not to get a personal loan:

  1. To go on vacation. Sure, you've earned some time off and want to relax and recharge. But the truth is that you can do that at home without going into debt. Instead of spending thousands of dollars on a trip, budget for a few outings that are close to home and pay cash. A vacation will only last a week or two but the loan payments will likely stretch out for months or years.

  2. To gamble. Lotteries and casinos are big business. However, while you may feel Lady Luck smiling at you, chances are you're going to go home with a lot less money than you started out with after a gambling session.

  3. To buy trendy clothing. Keeping up with the latest fashions can drain your wallet. Using a loan to buy the latest fads isn't very smart because super trendy clothing often goes out of style the next season. More than likely if you take a look in your closet you'll find you already have plenty of suitable clothing.

  4. To invest in the next big thing. Get-rich-quick schemes are a dime a dozen. Don't get caught up in something that sounds to good to be true and end up risking your financial future by borrowing a loan to invest in it.

  5. To keep up with your friends. It may seem like everyone around you is living large, but more than likely some of those people flaunting a lot of bling are up to their eyeballs in debt. Spend some time fighting off the green-eyed monster and count your blessings.

  6. Just because you can. Even if you can qualify for a personal loan that doesn't mean you should get one. Also, borrowing money to put in your savings until you need it is a losing proposition. The interest rate on a loan will be much higher than any return you could get with a savings account.

Be smart about borrowing money to fund your life. Look for ways to cut expenses and boost your take-home pay before even thinking about applying for a loan.


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