5 Reasons Not to Get a Loan

We've talked before about how loans can be a valuable tool for achieving your professional and personal goals. However, as important as it is to recognize financial opportunity, it's just as crucial to know when to say "no" to funding. Here are 5 reasons you should rethink a loan:

1. Interest Rates Are High

In the past, we've discussed the value of borrowing even when interest is high. However, this option is definitely not for everyone. If you go this route, you'll want to make sure that you're in an optimal position to borrow—that your finances are in order, you have an immediate opportunity for financial growth, and there is a significant cost in delaying funding. Otherwise, it may be best to wait until interest rates decline.?

2. Your Finances Are Fishy

If your books are looking unstable or your income is unpredictable, taking on additional debt will probably just dig you deeper into the hole—since you may not be able to meet the obligations of managing your new debt. If this is the case, take some extra time to stabilize your financial foundation before you consider borrowing.?

3. This Isn't Your First Loan

A person or business may borrow money many times throughout their lifetime, but if you're constantly needing to take out loans to cover your everyday expenses or maintain a certain? lifestyle—that's a big red flag. This behavior can lead to a cycle of borrowing that traps you in debt rather than elevating you to sustainability. Before you consider another loan, check your finances first.?

4. You're Not on a Mission

Before you take out a loan, you'll want to have a clear and well-defined purpose for your funds. Whether you're planning to use it for education, a big purchase, or expanding your business, formulating a concrete plan helps ensure that you'll make the most of your funding. As beneficial as loans can be, they should never be taken out for non-essential expenses or without significant analysis—as this can lead to regret in many forms.?

5. Your Credit is Poor

No matter what your reason for getting a loan, it can be hard to get favorable terms if your credit history is bad. In this case, it's best to partner with a funding specialist, like those at Ovesture, to ensure that you get the best possible terms for your loan. They can also help you improve your credit score and funding profile to increase the chances of better loan offers from financial institutions.?

The most important step you can make before taking out a loan is take a long, hard look at your own finances. How is your credit history? Is your budget in good standing? What are your goals for the money you plan to take out??

If you're having trouble deciding whether or not to take out a loan, reach out to us. The Ovesture team is well-versed in determining eligibility and opportunity—so you can make the most of your funding.?