Why take a loan ? What is this? Why is it so popular? Or even, why can’t we live without credit? What is the reason for such great demand for this service?
The loan agreement is a bilateral agreement, therefore it has effects for both parties. Through the loan agreement, the bank undertakes to make available a specific amount of cash for the borrower’s use, for a specific purpose and time. However, the borrower undertakes to use the funds credited by the bank for the purpose specified in the agreement and to repay the loan with interest on time and to cover additional costs.
When to take a loan
We apply for a loan primarily when we need cash to buy goods. Of course, there are other ways to raise money such as saving, investing and extra work.
However, we know that these options require a lot of effort, work and time. We need the time for both work and the final result, which is to collect a specific pool of money. When deciding on a loan, we usually don’t have time for any of these things.
Why take a loan?
We can take credit for a variety of reasons. It is often ours to see me and we buy our whims with a loan. In this way, we can quickly fulfill our dreams without sacrifices and our own work. It is different in the case when we decide to take a loan for e.g. housing or buying a new car, without which it is currently difficult to function. In this case, we take a loan to buy an apartment because, for example, saving with minimal earnings would be pointless. We know very well at what prices real estate can be purchased.
These are amounts that far exceed the financial capabilities of many of us. Then the only solution turns out to be taking a loan . Unless we are able to save the whole amount needed, repayment of the monthly loan installment for an apartment is an effective solution for us that we can afford. If we would like to save it would take us many years, and finally it would turn out that now it is not profitable to buy this apartment. With saving it also happens that there are situations in life when we need to reach for savings. This also significantly extends this process.
Why is credit so popular?
Precisely because we are not able to put out a lot of cash on our own. We could not buy expensive items or real estate. The bank gives us as much money as we need. We give the whole thing but in monthly installments, adapted to our capabilities.
Taking a loan is popular because we do not have large funds ourselves, but we are able to pay the installments ourselves.