When you should borrow money?

Because of technology, one of the easiest thing to today in the world of financing is to borrow money. Gone are the days when you need to get all the requirements and processing usually last for days before you can finally get approved.  Nowadays, banks, finance companies, credit cards, cooperatives, pawn shops – they all want to lend you money. So they send in pamphlets, flyers, letters, e-mails and even pre-approved loans with attached cheques to you. All you need to do is say ‘yes’, sign the form and the money will be in your bank account in just a few minutes.

And even people with bad credit report can still borrow money. Just log on to the websites of some cooperatives, and you will see that they proudly display that has bad credit can still apply. In short, there are no shortages when it comes to people offering you money. But should you take up the offer because it’s right in front of you? Should you grab it because it is there? After all, it is fast, easy and convenient. And most of all, it is still money, and there are a lot of fun things you can do with the money. But before you head to your nearest licensed money lender Singapore, you to determine a lot of things first.

First, you are not going to borrow the money just so that you can blow it on some gadgets, trinkets or toys. You are going to borrow only when you can generate more money with it. In other words, you borrow only when the return from the investment you are going to make is higher than the interest charged for the loan. Obviously, you would not do so when the situation is the other way around, i.e. when the return from the investment is lower than the interest charged for the loan. If you say that you cannot find an investment that gives a higher return than the interest charged, then the answer is not to borrow. Wait until you can find one that gives a higher return.

To summarize it all, do your homework before borrowing money. If you cannot make more money with the borrowed money then do not borrow. Don’t let lenders control you on how you will manage your own finances.