Who does not want “free” money? Certainly, that won’t be me. Money, clean money is a good thing, anytime… any day. Most of us are drawn to loans mainly because they give us the liquidity we need to get something done quickly, while we relax and pay them off later. But we must be strategic in the way we access loans because the reality is that loans are not free money. It is a financial liability you take up upon yourself, and the reason why you take on such liability should be worth it.
In this article, we will discuss what a loan is and how you can use a loan to grow your wealth.
What is a loan?
A loan is a debt provided by an organization or individual to another entity at an interest rate and evidenced by a promissory note which specifies, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment (Source: Wikipedia). A loan should thus only be taken as a matter of necessity. For instance, I would rather stay in my home on a holiday rather than borrow money just to join a group of friends to the party. A loan should not fund luxury. Luxury should be earned through hard work. There’s no need to force luxury when you cannot comfortably afford it. Rule of thumb is to never take a loan when you have no idea “how” to repay it.
When taken strategically, however, a loan can help you manage your wealth and in some cases even fuel growth, which brings us to the next sub-topic on how to grow your wealth with loans.
Growing your wealth with loans
So how best do you use a loan to flatter your finances?
1. To prevent you from touching your investments: Sometimes, in order not to liquidate your investment prematurely, it is advisable to get a quick loan to provide short-term liquidity. Liquidating your investment prematurely will cause you to lose the interest due you upon maturity. A loan could give you that quick fix while you reap the returns on your investments at the right time. Example of such loans is the Fidelity Fast and Easy Loan, which is usually processed within 24hours.
2. To serves as capital: Loans are also very useful when used to fund your little side business. With the right management, your loan could efficiently boost your business in a way that repayment is easy and business income is increased.
3. To enable you acquire cost-saving assets: For example: In certain rare instances, some people spend more money accessing public transport on a day-to-day for themselves and their families, compared to if they had their own car. A person who finds him/herself dealing with such an issue may want to get a vehicle loan to get a little car that serves the purpose just to be able to make some savings. It is always advisable however to ensure that the loan can be comfortably repaid.
While the list above may not be exhaustive, it goes on to say that loans must be taken as strategically as possible, to ensure that they are more of assets than liabilities. Fidelity Bank has a wide range of personal loans for all customers. Call 3355 for whatever details you may require or send a Direct Mail with your questions and you will be attended to.