There are so many types of loans advertised on television, radio, and email every day. It seems like everyone is in the lending business now. Mortgage loans, reverse mortgages, payday loans, tax return advance loans and private lenders for personal loans Canada: if you want money to pay for something, it can be yours.
Just because you can get easy money, doesn’t mean it is a good idea. The interest rates are usually exorbitant, and you’ll end up paying much more for something than you otherwise would have if you had the cash already. If you miss a payment or pay after the due date, there are usually steep penalties. Here are some examples of what you should never take out a personal loan to pay for.
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Designer Clothes
The temptation is understandable. There is a vast difference between designer knockoffs and the real deal. The fabric, the stitching and the cut make you feel elegant. However, classics never go out of style. Save up and pay cash instead of taking out a loan.
Prom Dress
Every girl wants to be a princess for a day, and the first example of that day is usually a prom. Unfortunately, like a bridesmaid dress, prom dresses are a one and done proposition. You’ll be paying for the loan long after the dress is gathering dust in the closet.
Shoes
For anyone who remembers the fictional character Carrie Bradshaw and her obsession with Manolos, you may think it is perfectly reasonable to stretch to pay for other things while dropping hundreds of dollars on a new pair of shoes. No matter how beautiful they are, you’ll enjoy them much less when you figure out you could have bought two or three pairs by the time you pay the loan back with interest.
Credit Cards
When you are struggling to pay your credit card payments, getting a personal loan is the absolute worst time to add to your mounting debt. Consider combining small loans into a longer-term loan at a reasonable interest rate. If you have multiple credit cards, take advantage of the special rates for paying off higher interest rate cards to consolidate. There are many avenues to managing your current debt without adding to it.
A Loan for Someone Else
Under no circumstances should you ever take out a loan in your name for someone else. Understand that there is a reason that people can’t get their own loans. Also, there is no compelling reason for the friend or family member to pay off the loan, as it will be your credit that gets damaged.
