MInTheGap

Almost never.

Why?  I’ll give you three reasons:

1. Because a loan basically makes you a slave to your lender.
2. Because you probably missed out on the best price you could have gotten for the item.
3. Because you are going to pay almost twice the purchase price before the end of the loan– if you make your payments.

So, now you’re asking: “When is it good to get a loan?”  The only one out of the many loans that ends up making sense is when you go for one of the conventional mortgages that are offered to help you buy a house.

And even then there are many to choose from– some better than others.

You have no doubt heard about the problem in the housing market with subprime loans.  These are loans given to people with a bad credit history.  There have also been problems with people who opted into adjustable rate mortgages (ARMs) that are now going up.

If you have to go with a mortgage (and you don’t), then pick a 15 year loan.  Not only will it save you money in the long run, but you’ll be paid off that much faster!

There are also products called secured loans that let you borrow against your house– the lender gets your house if you don’t make payments.  This, to me, is not a wise loan to get.  If you miss payments you could be out of your house!  Better to save up for whatever the expenditure is, and have an emergency fund, than to be out of a job and out of a home.

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