Borrowing money is something that many of us do for many different reasons. However, it should be a decision that is carefully made Although borrowing can be very beneficial, there can also be problems with borrowing as well, which need to be considered.
Advantages of borrowing
If you need something quickly and have no savings to pay for it then borrowing can be a really useful thing to do. It means that you will be able to quickly arrange a loan and then buy the item that you need. It is especially useful if you are buying an item that might save you money in the future or really benefit you. A bicycle might be able to do this if you use it instead of driving your car and thus save money in fuel and you will get fitter which will have health benefits for you. There are many other things which could have similar benefits for you and so could be worth borrowing money to buy.
Ways to ensure borrowing is manageable
It is really important to be careful with borrowing though and there are a few main things that you should consider. Firstly, you will need to think about the cost of borrowing. There are lots of loan types and there are lots of lenders and they will all charge different amounts of money for you to have a loan through them. This means that it is very wise to compare them so that you can decide which one that you want to use. IT might seem the obvious thing to do to just go with the one that is the cheapest. However, the cheapest one may not be very good in other ways. Therefore, think about what features you will want from a lender and then you will be able to check them out and see which fits your requirements the best.
It is also really important to think about whether you will be able to repay the loan. You are likely to be required to make a repayment each month and it is important to make sure that the amount is manageable for you. Think about whether you will be able to easily afford it, whether you will need to cut back your spending to pay it or whether you will really struggle to pay for everything you need to pay it. Then you will be able to decide whether getting the loan will really be worthwhile or whether it will be difficult for you.
How to decide whether to borrow for the bike
Once you have figures in front of you, you will be able to come up with a decision. So, find out how much the loan will cost and then you know how much extra you will be paying for the bike compared with how much you would pay without the loan. Then think about the repayments and check back in your bank statements to see whether you will have enough money to cover those monthly repayments. Then you need to decide how important it is for you to have the bike. Think about whether you really think that it will be worthwhile considering how much it costs.
It might not be an easy decision. There might be advantages and disadvantages to getting the bike this way. It can therefore be worth thinking of some alternative solutions. It might be that you will be better off if you use savings that you have to pay for the bike. You will lose interest on those savings but you will probably be paying more interest on the loan than you will be getting on the savings and so it could be worth using it. However, you might be reluctant to part with savings that you have worked really hard to accumulate or that you have been saving up for a particular purpose. You will need to think hard about what might be right for you.
Another alternative is to wait and save up for the bike. This could take some time and you will have to decide whether you think that you can wait this long and whether it will be worth waiting. If you are in a hurry for it or feel that having it will save you money, then you might not think that this will be worth doing and that a loan will be better.
Of course, you may not be bale to get a loan if you have a poor credit record. If this is the case then you will have no choice but to save up for the bike. It could be good to research different bikes and even look into second hand options so that it will not take so long to save up for it. You could also ask for contributions from people who like to give you gifts and perhaps cut back your spending elsewhere or try to earn more money so that you can more quickly accumulate the money that you need.