Reasons not to borrow money

Not borrowing money is often a sensible option. Why this is so you read in this article about reasons for not borrowing money!

Although borrowing implies responsibility and in the future seizes part of your budget, many people close a loan every day. In some cases this is necessary, but if borrowing can be avoided it is often better. This prevents you from recording and entering into obligations that you may not be able to meet in the future. Below we give some reasons not to borrow money:

1. You must always payback
Keep in mind that when you take out a loan, you will also have to repay it. It does not matter whether it is a private loan or a loan from the bank. Think of it as borrowing money from your future self: later you have to repay this money because you want to use it now. Even if there is no interest. Keep in mind that you register in this way when you take out a loan.

2. You pay more
In most cases, it is not an interest-free loan. It is not for nothing that you hear the slogan everywhere “borrowing money costs money”. Even if there is an interest-free period, in the beginning, you may still pay this later in the form of a high-interest rate. Or perhaps it falls under the heading of ‘transaction costs’ or ‘administration costs’. So read the fine print carefully and remember that if you had the amount on your account, you would receive interest on it. That way, money lends you double.

3. Choose to save
Saving for a particular purchase that you want to do is always better. Not only do you avoid interest costs on a loan, but you also receive interest on the amount on your savings account. Now, this is not at the moment to write home about, but nevertheless, you keep your money with you and do not spend money that you do not have. Putting aside a small amount each month to make a purchase is very sensible and thought through and prevents money problems in the long term.

4. Borrowing is more than just taking out a loan
Research has shown that a large proportion of people indicate that they are not borrowing, while they actually take a (form of) loan. For example, many people do not realize that buying on credit, making a telephone subscription including a device or making purchases with a credit card is also borrowing, and therefore also costs money. Be aware of this and do not pay too much!

5. Ask yourself questions
Before you decide to take out a loan for that beautiful car, the latest iPhone or a mortgage, it is important to be aware of the consequences and the costs that this will entail. After all, you capture yourself, making travel no longer among the options.

In which situation do you choose to borrow or not to borrow money? Are you aware of different types of loans that you exit without being labeled as a loan? Or do you have experience with the costs that a loan entails? Share your experience!