He that would have a short Lent -- let him borrow money to be repaid at Easter ~ Benjamin Franklin
Collateral is property you put up to guarantee or secure a loan. Stocks, automobiles, and real estate can all be used as collateral. The lender will grab them if you don't pay. An unsecured loan is given on the strength of your paycheck and credit history. If you don't pay, the lender can only sue. The interest rate is higher than on secured loans, and the repayment period often shorter.
The commonest unsecured loans are the lines of credit you arrange in connection with your credit card or checking account. How much unsecured loan can you borrow depends on your salary and the value of your assets -- savings, investments and real estate. The lender gives you the right to borrow up to a certain amount, whenever you want. You get the money by writing a check for more than you have in your account, or by slipping your bank card into an automated teller machine.
Your interest rate is the same as, or higher than, the rate on the unpaid balance on your credit card. There may also be a transaction fee. You are rarely pressed to eliminate the debt, beyond a minimum monthly payment. Don't borrow to spend. Occasional debt on a credit card never hurt anybody, but permanent indebtedness to support an implacable spending habit is a staggering waste. This is a loser's game. You are living rich while growing poor. But some people grow rich by borrowing. They use other people's money to build something of value for themselves. That is borrowing to invest.
Borrowing is using future income to pay today's expenditure and can be beneficial or even costly. If you are offered a flat rate of interest try to find out the reducing equivalent. Your bank will always advise you. Be aware that variable rates can increase. Any borrowing, secured loan or unsecured loan, could cost you everything you own if things go wrong. Use credit card advances or overdraft checking for sudden small needs. Then clear up this expensive debt orpersonal loans as fast as you can. If you borrow more than you can handle, you are the loser in the end.
Collateral is property you put up to guarantee or secure a loan. Stocks, automobiles, and real estate can all be used as collateral. The lender will grab them if you don't pay. An unsecured loan is given on the strength of your paycheck and credit history. If you don't pay, the lender can only sue. The interest rate is higher than on secured loans, and the repayment period often shorter.
The commonest unsecured loans are the lines of credit you arrange in connection with your credit card or checking account. How much unsecured loan can you borrow depends on your salary and the value of your assets -- savings, investments and real estate. The lender gives you the right to borrow up to a certain amount, whenever you want. You get the money by writing a check for more than you have in your account, or by slipping your bank card into an automated teller machine.
Your interest rate is the same as, or higher than, the rate on the unpaid balance on your credit card. There may also be a transaction fee. You are rarely pressed to eliminate the debt, beyond a minimum monthly payment. Don't borrow to spend. Occasional debt on a credit card never hurt anybody, but permanent indebtedness to support an implacable spending habit is a staggering waste. This is a loser's game. You are living rich while growing poor. But some people grow rich by borrowing. They use other people's money to build something of value for themselves. That is borrowing to invest.
Borrowing is using future income to pay today's expenditure and can be beneficial or even costly. If you are offered a flat rate of interest try to find out the reducing equivalent. Your bank will always advise you. Be aware that variable rates can increase. Any borrowing, secured loan or unsecured loan, could cost you everything you own if things go wrong. Use credit card advances or overdraft checking for sudden small needs. Then clear up this expensive debt orpersonal loans as fast as you can. If you borrow more than you can handle, you are the loser in the end.
