The internet has become a “place” where people regularly spend time, which is why all sorts of online personalities have sprung up. Among them are financial gurus, which have gained unprecedented popularity over the years. And because they can convince many that they are experts, many rely on them when making a wise decision. Some of the common misconceptions that financial gurus make center around how bad loans are, how loans are all the same, how one should not avail of short-term loans or how one should only borrow from family and friends and not from legitimate money lenders. When you scrutinize these assumptions, you will find that they are often unrealistic and untrue.
However, anyone can say anything online, so there is no certainty that what you get from these self-styled experts is accurate. And if they have millions of followers but say the wrong thing, then many people are hearing, or worse, believing financial misinformation. Now imagine if they say something about loans that isn’t exactly correct.
If you’ve been listening to them, then maybe you’ve heard a few loan-related myths from there. Here are a few common example:
Loans are Bad
There is a common misconception that borrowing money is bad. People presume that it means that you are irresponsible and cannot be trusted to run your affairs smoothly like how an adult is supposed to do. We have grown up in households that have drilled us with the mindset that all debts are bad debts and loans.
It’s a good thing to avoid taking out unnecessary loans, but there’s no problem with taking one out when done strategically achieve financial wellness and stability, and if you have a plan to repay that loan.
Do you have enough income to consistently pay it back, including fees and penalties? What will you do with the loan proceeds? Are you investing it or are you spending it on a vacation? These are a few questions that will help you discover for yourself if loans are good or bad.
Borrow Only From Family and Friends
The biggest advantage of borrowing from family and friends is that there’s no interest rate. Unfortunately, borrowing from family and friends often badly affects your relationship with them. If you’re borrowing a considerable amount, they can have a negative opinion of you. Aside from that, the lender could feel like you owe them not just money, but also a debt of gratitude. Lastly, the relationship could become strained, to the point that it will be hard to enjoy spending time with the lender without being reminded of your debt.
Lastly, loans with family and friends have hazy or ambiguous terms, even none at all. This might seem like a good thing, but it will be a problem if a dispute occurs.
Loans Are All the Same
This is another commonly spread misconception. Going straight to a lender without researching the different loan products would be haphazard. Take a few hours to research the loan products, its features, the maximum loan amount, interest rate, penalties and other fees.
Also, be wary of financial gurus who are endorsing a specific loan. You can research for yourself or visit the lender’s office to see what will work best for you. Keep in mind that online financial gurus are after viewers and followers. They may be endorsing something that will not fit well with your lifestyle, your income or your cashflow.
Do Not Avail of Short-term Loans
While short-term loans are often risky and often subject to exorbitant interest rates especially when there is no collateral involved, you can still find a reasonable short-term loan if you know where to look. The secret is in researching thoroughly and not confining yourself to the lender’s website, blogs or possible sponsored financial gurus.
You can always drop by a lending office to ask for their loan products. You can always ask them to explain the features to you in simple terms. Do not let restrictions, real or imagined, force you to make decisions. Double check and explore options.
A Good Credit Score Is All You Need
Undeniably, a good credit score will come in handy when you are applying for a loan. It assures potential lenders that you are a good payer. However, if you are availing of a loan for the first time, do not let this deter you. As long as you manage your debts well, your loan might still be approved.
Take What You Read And Hear Online With A Grain of Salt
Online financial gurus deliver information conveniently and entertainingly. However, since anybody can say anything on the internet, the advice they give may not apply to everyone, or worse, may be inaccurate in the first place. Thankfully, by doing your research and going to the right sources, you can avoid the misconceptions online gurus spread by accident or maliciously on purpose.
Keep an eye for more latest news & updates on Essential Tribune!
