Loan means lending money. From one source to the receiver. It is basically a form of a credit. We borrow money because we need to pay for something or it could also mean we borrow to use it on an investment. Whatever it is your reason. You may need to take into consideration the following:
1. Interest – daily/weekly/monthly/yearly
2. Collateral to be use
3. Calculation – do you think you can afford to pay it on its term?
We loan to pay for our obligations- this is the most common reason. We need to pay our bills, credit card, mortgage, insurance etc… But sometimes this reason could be very unreasonable because when we have already the money in our hands, we do not entirely intend to pay it to our dues. We keep some of it to buy stuffs that is not a necessity after all. We make the “borrowing” a complicated “word” by doing this act. Not a good solution if you would only think deeper on the thought. Think of the consideration before applying for a loan.
We loan to put it on an investment – a very good idea, this is acceptable and realistic. BUT, you need to be very careful on what business to put up or where to invest your money so you could pay off your loan. Because if not…you know where this could lead you. Applying for a loan is very risky especially if you are planning to borrow a huge amount and is payable in a short period of time (with the interest compounded sometimes). So you need also to think very hard and planned what and where you will bring you money for an investment, because, investing is more risky than borrowing.
Loan and investment is somehow related, if you know this two terms basically and literally you can go a million miles away with a million cash too…
Think before making a loan…
Think before investing your loan…
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