In many cases, loans can be a great way to supplement your budget and get extra cash when you really need it. But everyone also knows how much risk comes with borrowing credit, because every time you borrow the smallest amount of credit, there is a chance that something will happen in your life and you will not be able to repay the loan, leading you to a list of debtors can influence your creditors’ decision every time you want to borrow again in the future.
However, there are loans that you should be particularly careful about borrowing, or you really need it because some types of loans are nicer than others.
High-Risk Mortgages (Floating Rate Mortgages)
One of the loans you should think twice before deciding to borrow is mortgages, or high-risk mortgages, because they have a variable interest rate. These loans became especially popular before the crisis, when everyone was rushing to buy property and housing.
However, people are still borrowing this type of loan, especially to be able to afford their dream home. But as today’s credit and real estate markets have changed dramatically, it is often the case that those who have borrowed large mortgages now regret it because their loans have grown significantly and if you are not a good manager of your money, this increase in the annual interest rate on loans can mean that you are either in debt or, at worst, even losing the real estate you purchased with this mortgage.
Therefore, if you want to borrow a mortgage, which is always a long-term loan, I recommend borrowing at a fixed rate, which will eliminate the possibility that your monthly payments will increase by several times.
Credit cards if you use them very often
Another type of credit you should think about before you borrow it is credit cards. In particular, you should consider choosing a credit card rather than just a debit card if you tend to spend a lot of money and don’t keep track of your spending.
One study has shown that people who have credit cards rather than debit cards tend to spend between 12 and 18 percent more money because they are unaware of their money and spending, knowing that credit card overdraft is possible.
Therefore, if you know that you are not one of the most successful financial regulators in the world and tend to live beyond your means, then definitely give up the credit card option and simply choose a debit card so that you do not suddenly have a large debt.
And these loans are some of the most dangerous loans, so definitely think before borrowing a quick credit, because it allows people to get a loan quickly and at a reasonable amount, without too much bureaucracy and their financial checks, meaning that people who difficult to go with your financial management can happen to get into big debt thanks to these loans.
Not surprisingly, these loans are even banned in several countries for the sake of easy borrowing, without much consequence, as many people who borrow it do not realize that, although it is easy to borrow, such loans are subject to very high annual interest rates, resulting in unless you repay it with interest-free credit, you will have to repay a much larger amount than you borrowed.
Therefore, definitely consider all options before borrowing a quick loan, but if you know that fast credit is your only option, then definitely choose the lender who offers you the best credit terms.