2007-11-13 02:25:43 · 11 answers · asked by you know. 1 in Business & Finance ➔ Renting & Real Estate
Advantage: Taking out a loan gives you "instant gratification"
Disadvantage: It quickly wares off- and you're still stuck with a payment and interest. Things end up costing more.
Advantage of not taking out a loan: You feel more pride when you have saved and saved and purchased something with cash. There is no interest or late fees or payments- you pay for it- and all you get to do is enjoy what you spent the money on (car, house, vacation).. I think you appreciate the things you have more-- ie.. it's like paying with a credit card versus cash. It's a lot harder to plunk out 300 bucks for something with cash- than to just swipe a card and forget about it until you get the bill.
2007-11-13 02:30:50 · answer #1 · answered by Amy Clark 5 · 2⤊ 1⤋
Only you know how big the loan is, it's terms, and the certainty of your being able to pay it off as planned. And only you know the advantages of what you are purchasing. If the purchase is an investment that will eventurally pay for itself -- something like remodeling your home to be more energy efficient, figure whether the savings will be sufficient to pay back the loan AND the interest, and how long it will take to acrue those savings.
If it's something that is going to get worse and more expensive to fix the longer you put it off -- like getting your teeth fixed -- then the cost of the interest may be more than offset by getting a cheaper fix now instead of a more costly fix later AND the advantage of having oral health and a lovely smile.
If it's for something that it more a pure pleasure than an investment which will result in long term servings -- say a vacation, a wedding, new carpet, a jet ski -- then you should make payments as if you had a loan, but but pay the "loan" off first and THEN make the purchase. Thay way you collect interest instead of paying it. Start a savings plan, and as your funds grow move to higher interest instruments like premier accounts or CDs. This year alone I earned enough interest on my vacation savings to pay for one night at the cabin.
On the other hand, how much is it worth to you have and enjoy your purchase now? Don't buy cheap, flimsey scuba equipment that you're going to have to replace in 3 years anyhow. Take on a little debt and buy good equipment that will give you many years of excellent service. It boils down to whether to extra expense of the loan is balanced by the advantages of spending now as opposed to waiting to save.
2007-11-13 02:42:01 · answer #2 · answered by kill_yr_television 7 · 1⤊ 0⤋
Advantage, as one has already said: quick money
Disadvantage: you have to pay interest on loans, and sometimes you end up paying twice the amount you borrowed.
I'd just take the time to pretend that I'm paying back a loan, not missing any "payments" else "bad things will happen to your credit" - and forget about the money until I have enough for what I want!
It really works - just put yourself into the right frame of mind for it like you're paying a real bill that has late fees and all sorts of penalties if not payed on time and in full. I did it three times for stuff i wanted.
2007-11-13 02:32:15 · answer #3 · answered by Anonymous · 0⤊ 1⤋
The advantage is really cash flow related. If you are going to drive a car for 5 years, then you might as well pay for it over 5 years to stretch your cash flow out.
The disadvantage would be that when you borrow money, you have to pay interest. However, hopefully the interest rate you are paying is less than the rate of return you are earning on the money you have invested in the market.
2007-11-13 02:31:30 · answer #4 · answered by Homeslice 4 · 2⤊ 0⤋
the advantage is of course you get the money and things you want to buy, the disadvantage is when you have to return the money back to the lender, but i guess one does not necessary take loan to buy anything unless you wanted to buy something that you have to pay by instalments, like for example cars or house, and meanwhile if you intend to take up loan, you can visit this site 88db for list of licensed money lender
2007-11-13 02:56:11 · answer #5 · answered by Anonymous · 0⤊ 0⤋
advantages;none
dis-advantages;debt,interest,re-payments,loan usually lasts longer than the purchase,less money to spend every week,borrow more etc etc etc
save for the purchase it will feel so much better e.g a nurse in the uk wanted a dodge viper nurse=low wage so she started doing as muc overtime as she could got a part time job 2years later she bought one £55,000 if she was lazy and got a loan she would have been paying back £62000 over 5 years with a £15000 deposit speaks for it's self
2007-11-13 02:37:06 · answer #6 · answered by golden 6 · 0⤊ 1⤋
advantage - immediate gratification
disadvantages - you'll be paying off the item for a long time. paying more than you intended (interest, possible late fees, etc)
Still paying and risking that it becomes obsolite
still paying and risking the item becomes damaged or broken.
there are few things in life that require a loan. Most can wait till you save up the money. Will be better for you in the long run.
2007-11-13 02:31:39 · answer #7 · answered by Connie S 7 · 2⤊ 1⤋
Advantage: Quick, large sums of money for very little work (initially)
Disadvantages: You have to pay back more than you borrowed (interest), a lot of companies secure it against your home which is risky and you have that debt hanging over you for large amount of time.
2007-11-13 02:29:58 · answer #8 · answered by Stevie B 2 · 2⤊ 1⤋
Paying it back! If you need to take out a loan to pay for something then it is beyond your means therefore making it hard to pay it back. If it is not absolutely necessary then don't do it.
2007-11-13 02:32:03 · answer #9 · answered by tikababy 6 · 1⤊ 1⤋
Advantages - you get what you want now.
Disadvantages - you pay more for what you want - and in a lot of cases, you pay more and more and more with the interest.
Better choice - wait, save money, then buy when you have the money.
2007-11-13 02:28:52 · answer #10 · answered by squintkid 2 · 2⤊ 1⤋