This is a question that many consumers face. Even if the answer cannot be given universally and it always depends on the personal financial situation of the borrower, there are some basic things to consider when taking out a loan.
Credit: What should be considered?
The most important basic rule in borrowing is certainly, not to overextend oneself financially.
Consumers should therefore honestly assess whether they can afford the monthly instalments for a loan in the long term. It may also be possible to postpone individual consumer wishes into the future: This saves money.
For larger purchases, such as the purchase of a car, will hardly get around a loan. Here too, however, you should ask yourself whether the purchase is really sensible and necessary at the time planned. Consumers should also compare the cost of credit: Even small differences in the APR can account for price differences of several hundred to a thousand CHF.
What is the case for borrowing?
- If the credit card is regularly overdrawn, it can make sense to balance the credit card with an installment loan. Installment loans are usually much cheaper than repaying a card.
- Investments where you can make a high profit.
- You can pay for your car with a loan and get cash purchase discounts.
- Property abroad: to acquire for retirement or as a future investment, a bank loan is of course useful
- If they are already taking out a loan, they should spend the money on the things that are actually necessary for everyday life. Be careful with consumer goods and holidays: Here it is often more sensible to save the necessary amount of money instead of financing it.
What are the arguments against borrowing?
- Calculate whether your income is sufficient to cover the loan instalments in the long term. Also take into account possible losses in their income and increases in the cost of everyday things.
- If the bank refuses a loan, it may be a sign that they have been too optimistic about their own financial situation. Be careful in this situation. Offers from credit brokers or those promising loans without ZEK should be viewed particularly critically.
What should be considered when taking out a loan?
Compare the prices and include online loans in their decision for a bank. Decisive for the cost of a loan is not only the interest, but also all the costs incurred. Criterion for the loan comparison is the APR.
If you want to speculate with the borrowed money itself. In other words, you should never take out a loan to buy shares with a supposedly surefire return. The only sure thing is that you have to pay back the money with compound interest - even if the actual sum has long since vanished into thin air.
So always check carefully if there is not another way before taking a loan. Never take out a loan for an item or action whose value will expire. A holiday trip is a classic example of this: three weeks of relaxation, three years to pay off!
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