Top 10 Reasons People Borrow Money
Most of us will need to borrow money at some time in our lives. From unexpected purchases (broken fridge/T.V etc.) to booking a vacation. There are times when we simply don’t have the savings to pay for something outright or, we have other commitments that make it impossible. There are many different types of loans. Some of the most popular loans are;
Secured: A secured loan is a loan that has some form of collateral attached to it. The borrower pledges the item to secure the loan. An example is a mortgage loan to purchase a property. The mortgage loan is secured by the property, if the borrower does not make the agreed payments, the lender can repossess, or take back the property. Another example may be a car loan, the car secures the loan.
Secured loans are less risky to banks and lenders due to the fact there is something of value that can be taken back if the loan is not paid.
Unsecured: Unsecured loans are just the opposite of a secured loan in that there is no collateral or item(s) secured to the loan. Examples of unsecured credit or loans would be credit cards, overdrafts, personal loans, and lines of credit.
These types of loans carry a higher risk to the lender, so usually, the interest rates on unsecured loans are higher than secured loans. Guarantor loans are also popular types of loans.
So, what are the top 10 reasons people borrow money?
- Wages spent and urgent cash needed to last until pay–day – we’ve all been there, trying to stretch our finances and make them last to the end of the month. Some months are more expensive than others though, from unexpected expenses to large utility bills (in the Winter months). Sometimes you just can’t make it stretch, cash advance loans can help you.
- Car repairs – most households have at least one car now (if not more) keeping your car on the road can be expensive, replacing tyre’s, servicing and general upkeep all cost money
- Household/utility bills – another essential, paying your utility bills, if there’s one thing that’s certain in life its regular household bills
- Clothes/online purchases – this is a tricky one, should you borrow money to buy clothes? Really it should be a part of your monthly budget, however, if you find you’re suddenly under financial pressure in other areas it can be difficult to cover everything with your own money.
- Entertainment (Nights out) not that we’re doing much of this at the moment with COVID-19 keeping us indoors! Going out can be very expensive – look at how much you’re spending on going out and maybe rethink how much you’re doing it if you need to borrow money
- Children – goes without saying. The little one cost a fortune – FACT.
- Shopping – food shopping especially should be something you budget for. If you need to borrow money to buy food you may need some free debt advice.
- Tickets to events – depending on the event, tickets can be costly things, especially for big games or sought after stadium concerts.
- Special occasions (Birthdays, Christmas etc.) both come around once a year! Depending on how many relatives/friends you have – both can cost a lot of money.
- Topping up cell phone – another thing that you should be budgeting for. Pretty much everybody has a cell now. No longer a luxury item you need to keep it in mind when you’re working out your budget.