Tips to Avoid Taking on Loans

Paying for education, buying a car or a house are costly investments. Some people are sure they can’t go without a loan to finance these purchases. But there are some ways to avoid borrowing, and here they are.

Studying

Getting a university degree may cost a fortune. That’s why students and their parents worry whether to apply for a university loan or not. Although the debt may be enormous, expenses should eventually pay off: statistically, university graduates earn about twice as much then people with no degree. However, time has to pass until the investment brings dividends. The good news is that the loan doesn’t have to be that large and overwhelming and here’s why.

Scholarships and grants. Thousands of them are available for application. Unlike student college loans, scholarship and grant holders don’t have to pay the aid back. Grants are usually given to people whose income is on the lower side. Scholarships are awarded to people with exceptional academic performance regardless of their financial conditions. The trick here is to start looking and applying for programmes as early as possible and get as many as you can.

Education Repayment. Some employers agree to repay part of a student’s university loan. The amount of reimbursement varies from company to company, as well as the requirements for eligibility. Some employers offer compensation straight away; some may ask a graduate to work for a certain period to enjoy the benefit. An employer may also check whether you make regular payments yourself. In any case, look for a company that provides such an opportunity.

Accommodation

Renting a place to live in may be costly, but buying one can drain your purse. Obviously, purchasing with cash will cost you less, as you have no debt obligations. Also, if you pay in cash, sellers find you more attractive, as they don’t have to wait long. However, saving a large enough amount for buying or renting outright will take time. At some point, loans may seem quite attractive regardless of their commitment nature. So, is it possible to avoid borrowing?

Renting. Landlords usually require that their tenants should prove that they are financially responsible. They run credit checks on their potential renters. But what if you have never had a credit history or any debt obligations? Try looking for a landlord that doesn’t require one. You can usually find such house-owners in the areas near a college or university. They are used to credit-free students seeking accommodation.

Buying. It’s quite difficult to buy a house without taking a loan. This is too big an investment to be made outright and all in cash. It is possible, however, if you choose to buy a house in the suburbs. Real estate located outside big cities may cost up to ten times less than those within the city boundaries.

In addition, buyers that don’ qualify for a mortgage may have the chance to purchase a house through owner financing. Instead of going to a mortgage bank, the buyer borrows directly from the house seller. This a cheaper and more flexible option with no underwriters.

Car

Although your area may boast an efficient transport system, having your own car is a dream that makes day-to-day life more convenient. Buying one is a big deal and many things have to be taken into consideration. One of them is the price. While some cars are too expensive to be bought with no borrowing, many models are quite affordable.

Buying a Used Car. A used car is a good option that is usually underestimated. People avoid it believing that it’ll break down soon. Solve the problem by undertaking a proper inspection before buying. Just bring it to a reliable mechanic to overcome your doubts. Also, unlike new cars, you can choose from a wider range of models. You are not limited to the ones issued for the past year only. Used cars cost less and that’s why you can buy them right away without any loans.

Cut Loan Length. If you have decided to borrow money to buy a car, at least consider cutting the length of the loan. Stretching it for years can make the purchase rather costly, but think of the money you will have to pay in interest. Think of the depreciation of the car as the time goes by. Longer auto loans are worthless, although it seems to be cost-efficient to pay a comfortable sum of money every month. Don’t forget the bigger picture.

Conclusion

Loans are commitments that can, in some cases, last for an entire lifetime. Avoiding dependency is a reasonable step. To secure your mental comfort you can choose a debt free path. People around you may take loans to finance whatever they want to purchase, but it doesn’t necessarily have to be that way.