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Old 09-26-2019, 08:31 PM
 
356 posts, read 204,829 times
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Are bank loans kind of like drugs...they make you worse off debt-wise if you are addicted to them.

The more loans you borrow & take, the more of a debt deficit you are in because of the interest rate you have to pay.
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Old 09-27-2019, 04:59 AM
 
13,287 posts, read 10,991,346 times
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Quote:
Originally Posted by mrxalleycat View Post
Are bank loans kind of like drugs...they make you worse off debt-wise if you are addicted to them.

The more loans you borrow & take, the more of a debt deficit you are in because of the interest rate you have to pay.
Yes!

Car Title Loans = Fentanyl

Pawn Shop/Payday Loans = Heroin

Business Loans = Caffeine

Car Loans = Speed (methamphetamine)

Student Loans = Ritalin

Credit Cards = Alcohol

Mortgages = Xanax or Valium

Medical Bills = Penicillin

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Old 09-27-2019, 06:54 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
33,075 posts, read 60,089,538 times
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Like drugs, bank loans are great when appropriate to solve a problem, when you have the credit to get a low interest rate, and enough income to make the payments. People paying 29% on a credit card are never going to kick the addiction, same with car loans at 13+% for 72 months, but 4% at a credit union is very reasonable.
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Old 09-28-2019, 08:48 AM
 
Location: North Idaho
25,199 posts, read 33,115,771 times
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Well, there are times when it makes sense to borrow. But if you are "addicted" to borrowed money, then you are buying stuff you can't afford and your finances are going to get really messed up.
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Old 10-16-2019, 10:23 AM
 
Location: VA, IL, FL, SD, TN, NC, SC
1,367 posts, read 395,499 times
Reputation: 3127
Quote:
Originally Posted by mrxalleycat View Post
Are bank loans kind of like drugs...they make you worse off debt-wise if you are addicted to them.

The more loans you borrow & take, the more of a debt deficit you are in because of the interest rate you have to pay.
No, because a responsible person only uses debt to improve their situation. For instance buying a reliable used car so you can take a new job that is located well away from public transportation and the new job is in a growing industry, pays more, and offers more long term prospects.

Or, taking out a loan in order to undergo training or certification in an industry that has good paying jobs that will not only allow you to pay off the loan, but increase you overall wages. Consider the landscape person who decides to get a CDL.

Or, you open up a convenience store and use a short term loan to buy initial stock as the Rack Jobbers will not extend you credit.

Or you are a Rack Jobber and you take out a loan to buy your truck.

Many small retail businessmen take on loans to finance merchandise for Christmas.

Most franchisees take on fairly pricey signature loans in order to finance mandatory remodels when their FA is up and they need to sign a new agreement under the current conditions.

Loans also are used to mask bad behavior and paint them with a thin veneer of responsibility. The most common example of this is in those pursuing college educations, buying autos, or homes.

It is only those who engage in conspicuous consumption that are adversely impacted. The key is to make sure your expected return exceeds your loan cost. The reason it is key, is people often over buy something when the basic premise for the object is sound. This is very often true when it comes to automobiles, smart phones, education, homes, etc.

Last edited by GhostOfAndrewJackson; 10-16-2019 at 10:34 AM..
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Old 10-18-2019, 10:21 PM
 
9,221 posts, read 7,857,628 times
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If you can refinance at a lower rate, then is kinda good isnt it?
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