What time of Life is Best for Getting a Loan?
Borrowing money is always a risk. If you take out a loan, then you will be committed to making a certain amount of repayments over a certain time. This means that you will have to be sure that you will have that money available for you to be able to do this. If the loan is quite a short term one, then it is easier to know whether you will have the funds. If it is a more long term one, then you will not be able to have such a good idea of what may happen in the future with regards to employment, illness, expenses etc.
It is always wise to have a good think before borrowing any money about how easy it will be for you to pay it back. Consider whether it might be better to wait a while before you borrow so that you are in a better financial position or whether you feel this would be a better time as it might be harder in the future. If you are not sure then there are several main things that you should consider.
Family is an important consideration. If you plan on having children in the future, then expenses will go up. Consider whether it is likely that you will still owe money when they are born and if this will be something that you will be able to manage. Think about whether you currently rely on two salaries and if that will go down to one and what effect that will have on your finances and if that will mean that you can no longer afford the repayments. If you already have children, then you will be aware that they get more and more expensive as they get older and if you are struggling it might be better to wait until they are old enough to earn some money before you borrow yourself. Of course, that can be a big of a juggling act as you may have to reduce working hours to look after elderly relatives or even be near to retirement so not able to get a loan at all.
Work is also a very important consideration. You need to think about whether you have a secure enough job to be able to make the repayments and whether this is likely to remain the case for the full term of the loan. It can be more reassuring if there is more than one salary coming in to the household so there will still be money available even if one person is not working for some reason. It will also depend on what skills you have and what demand there is for those skills as you may find that you will easily get a new job, should you be made redundant, but it all depends on how in demand your skills are. Also consider your health and whether there is any risk that you may have to give up work because of it. Obviously no one wants to imagine this might be the case, but you will know whether it could be a possibility.
It is also important to take a look at what other debt you have. If you already have a lot of unpaid debt, perhaps a credit card, other loans or a mortgage then you need to consider that you already have a lot of responsibility with regards to finances. If you take on even more debt, you may find that you are in a situation where you find that you are out of control with your debt, that you cannot afford to make the repayments and face charges and other problems such as court demands or repossessions. No one wants to be in this situation, but if you just have a few too many debts, it could lead to this.
So there is not really a specific time in life that is best for getting a loan. In fact with most borrowing it is probably best to try to avoid it if you can, or think very hard about whether that borrowing will improve your circumstances overall. It should be a decision that you spend some time over as it will have a significant impact on your life. Debt differs and getting a mortgage is a very different type of debt to a loan to pay for a holiday, but whether you can justify the loan will depend on many factors. You will need to consider your current financial and work situation, your family situation and how much you want to borrow. Work out how much the repayments will be and see whether you can afford them and if you think this will be true in the future as well. It is not easy to predict the future but you can assess the risk if you consider all of the important factors.