The five worst reasons to borrow money

Belgians have gone into massive debt in recent months. More than 7% of Belgians are known as a defaulter and therefore cannot repay their loan on time. Magazine Netto thought it was time to investigate the worst reasons for taking out a loan.

The worst reasons for taking out a loan
The worst reasons for taking out a loan

Borrow money? Rather not for the following top 5 worst reasons for a loan, elaborated by the Belgian magazine Netto. If you still want to borrow money, always take a look at the 10 golden borrowing rules of Loan & Money itself.

1. Vacation
If you don't have a lot of money, but still want to go on vacation, you can apply for a vacation credit. You can then go on vacation, but you will probably be paying off for the rest of the year. If you take out a loan with a very short term for a holiday, take extremely high interest rates into account.

2. New car
A new car is a bad investment. For example, the value of the car drops enormously the moment you drive it away from the garage. A car loan is therefore not a good idea. You have to make payments for a long time, while your car depreciates much faster. You therefore have no collateral for your loan. Often times, a financing offer from your dealer is a better alternative.

3. Marriage
If all goes well, you only get married once. It makes sense that you want to make a big party out of it. But to take out a huge loan for that is not very sensible. You are starting your future as a couple financially not very strong if you are in debt. Buying a house or making other major purchases can be hindered by a loan from a bank. If you want to borrow real money for your wedding, you may want to try it with family or friends.

4. Help a friend
Of course it is very thoughtful to want to help a friend who is financially tight. Unfortunately, paying off the loan can seriously damage the friendship. If your friend does not repay the loan, you have lost not only your money, but also your friendship. Also try to draw up some kind of contract with loans to friends, so that you can take steps, if necessary, to get your money back.

No matter how deeply you study it, buying stock is always a gamble. Chances are your stock portfolio will not yield enough returns to pay off both debt and interest. And even if you do succeed, you have to do well on the stock market to get the cost of the loan out.

Published on October 14, 2010 at 10:12 a.m. by the editors .

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