Proverbs 22:7 states “The rich rules over the poor and the borrower is the slave of the lender”. This verse, written thousands of years ago by one who was called the wisest man who ever lived is still true and yet we live in a society of borrowers and lenders. One of the leading causes of divorce in this country is money problems, one of the leading causes of suicide in this country is that of debt and money issues and the chief cause of the recent economic trials is that of debt. So are there any good reasons to take out a personal loan? The answer is yes, a handful, and in those situations they can be useful without making you a slave to the lender.
The first and most obvious of these is the consolidation of higher interest loans. This is typically personal loan to pay off credit card loans and it can be a good or a bad decision based on the decisions you make before and after this loan. The important factor to consider before borrowing to pay back debt is that of debt expansion. Simply borrowing money to pay off credit cards and then continuing to use those credit cards is a step to financial disaster. If you have reached the point of borrow to pay off debt then this loan must be your last, at least until it is paid off. That said, cutting interest rates by a dozen points and having only a single payment with far smaller penalties can be a good thing.
The next consideration for a personal loan is in the attempt to produce more money than the loan costs. The most typical way to do this is through the improvement of a home. A personal loan for house repairs before you sell the house may or may not be a good idea. What you must consider most carefully in this is your ability to pay if the house doesn’t sell quickly, the actual cost to benefit of the improvements and the ability of people to pay the increased price. No matter how well you plan this type of a personal loan is always going to carry some risk, but if you understand this and are able to repay the loan even if you fail it may be worth considering.
The third valid reason for a personal loan is that of improvement of your economic situation. This includes personal loans for the sake of education or starting a business. As with the previous reasons the loan is not the optimal choice for this and especially in the case of the business you are often better waiting until you can begin without one but in both cases it is possible to create a situation in which the cost of the loan is less than the cost of not having the loan while they silently enslave you in a web of debt.
Debt is something that we enter into far to casually in the modern world and though we may believe that our economic situations are far superior to those of the ancient world where loans were the domain of criminals, liars and sharks if you look behind the facades of those who are offering to loan money in our modern day you will often find that it is those same criminals, liars and sharks but now they wear suits and pretend to be your friends.