Small Guide on Financing & Loans
A speaker from BCCA Loans becomes our personal guide on the route to financial literacy. Learn more about the various types of financing, the pros and cons of loans, and the reasons for getting or not getting guaranteed installment loans.
About 56% of Americans have less than $1,000 in their savings accounts. That means that when facing unexpected expenses, most people are not able to cover them with their set aside money. So, 8 out of 10 Americans have some sort of debt, whether it's a mortgage, vehicle loans, or college loans. But debt is not always a bad thing. In some cases, loans help us reduce the financial burden and avoid stress.
The most popular financing options are college loans, mortgages, personal loans, auto loans, small business loans, and payday loans. Each of these loans was created to solve borrowers’ problems and help them achieve their specific financial goals. While some huge purchases, such as a new house, require financial assistance due to their high costs, in some cases, people take loans because of some financial emergencies they face. In these situations, delay can be disastrous and lead to debt accumulation, lowering your credit score, and financial stress.
So, there are the following advantages of getting a loan:
- Loans allow you to reach your personal and financial goals right now;
- Loans can help you avoid financial stress in case of unexpected expenses;
- Loans have flexible terms and offer different options for any purpose.
At the same time, the disadvantages of loans include:
- Ability to accumulate unnecessary debt;
- Overpayment due to rates and fees;
- Short-term credit damage.
However, there are loans that don't affect your credit scores, such as payday loans or guaranteed installment loans. They are available to every adult with any type of credit and usually have short terms and a limited maximum amount to make them easier to repay.
Thus, loans can be your allies, not enemies, if you approach them wisely. The main reasons for applying for a loan usually are:
- Financial emergencies, such as utilities, car repairs, or health problems;
- Huge purchases, for example, a house or a car;
- College study funding;
- Home improvements;
- Engagement and wedding financing;
- Starting your own business.
It is not recommended to take a loan to maintain an expensive lifestyle. It will lead you to rack up unnecessary debt.