SOS thanks?

Question

why would ppl want loans? give me different ideas...for what purposes...eg universityfees etc.give me more ideas

Answer 1

Say it costs $40,000 to go to a 4-year in state college. Figure a college graduate makes $45,000 a year after graduation vs. $30,000 a year for someone who went straight to work after high school. That extra $15,000 a year will pay off the loan real quick, which is why it's a good investment and so many people do it. This applies to home mortgages also.

People also take out loans for dumb reasons too: they cannot afford a luxury car so they take out a loan and pay lots of interest to drive a car they couldn't otherwise afford. Credit cards are this same deal: you pay someone else for the privilege of owning something you cannot afford on your own.

Answer 2

Loans give people the possibility of affording more quickly what would take a long time to earn the total cost. People take out loans to afford university tuition, to purchase cars, to purchase houses. Some people take out loans to settle debts. The idea behind a loan is the principle of opportunity cost. This concept is that every action you can take has a cost to you and also a benefit. When you make one choice, you give up another choice. When a person takes out a loan, they believe that the benefit of obtaining an item or service with the loan is worth the combination of interest and other fees that is associated with the loan. They also commit to a certain period of repayment for the loan, instead of commiting to themselves to save the amount over a period of time to purchase outright. In the example of a mortgage, many mortgages are 15-30 years, with options for 40 years and 50 years in some regions of the US. Many people just don't want to wait half of their life or better to afford a home.