How times change! While it was not too long ago to take out an installment loan and get into debt, the topic of credit is now a good thing. There is nothing left with negative comments or an incredulous, critical “shake your head” when you speak openly about credit. Without a doubt: The installment loan has significantly improved its reputation in recent years.
There is hardly a product that cannot be financed cheaply – be it the smartphone, the food processor, the vacation, or traditionally just the car or the longingly desired home. Life is really easy. Taking out and using a loan is just as easy today as going “shopping”. Only sometimes should you ask yourself whether taking out an installment loan really makes sense – right?
Taking out an installment loan means assuming financial responsibility
There is no question that everyone wants to fulfill certain wishes somewhere or to strike at a particularly cheap bargain. Even if your own funds are not sufficient for the purchase. So a loan is needed to satisfy the need to “want”. But does that have to be? Does an installment loan really make sense?
And the question of meaning has its justification, because many people are often not sure whether it makes sense in an individual situation to take out a loan or not. Admittedly – in principle, every adult should be able to estimate when it is necessary to take out a loan. But if that were the case in full, a not inconsiderable part of the population would not be in debt.
Installment loan only for really important purchases
So again the question: When does an installment loan actually make sense? But making a general statement on this question would be a mistake. Because each installment of an installment loan is based on an individual need and so each individual case must be viewed in exactly the same way. Basically, however, the following applies: If something is to be purchased using an installment loan, then it should, or rather must, be a really important purchase. Conversely, borrowing makes a lot less sense for a product that you would like to have but that is not absolutely necessary.
Other ways to borrow
As a rule of thumb, only durable, value-stable products justify taking out an installment loan. Classic examples are certainly a new motor vehicle, motorcycle or high-quality furnishings. This can also apply to technical devices to a limited extent.
However, it should be borne in mind here that technical progress is now progressing very quickly and the loss in value of those devices is therefore very high. In such a case, it is advisable to choose a shorter loan term than the expected service life of the device. A cheap loan can also be used very well to replace existing, more expensive loans, such as the overdraft facility.