Money Moves

ALONE? A LOAN? ONLY WHEN…

loan

It’s become somewhat of a norm for financial institutions to come to you, especially if you are a public servant, with mouth-watering financial assistance in the form of loans. Most people jump on this opportunity with the hope that their incomes or salaries would repay the loan in the shortest possible time. It is however important to note, that companies are in business to make profit, so are these financial institutions. They are in operation not to seek your welfare but to accumulate wealth, and you are the means to that end. Don’t get me wrong; loans are not bad in themselves but they can worsen your plight.

Over the years, non-performing loans have been a huge threat to the continuous existence of a lot of financial institutions. A lot of people, including corporate bodies go in for loans and are unable to repay. Individuals or corporate bodies are offered these loans on the basis of their capacity to pay back. However, for one reason or another, they default. Well, I cannot diagnose the problem, talk less of giving a possible solution. I will leave that to the experts who have been studying the economic behaviours of people and companies for decades. My utmost concern as I write this piece is you. Loans should not be your pre-occupation. It shouldn’t be your first line of action to any unforeseen circumstance or planned project.

I will not sit behind my PC and pretend that financial challenges don’t exist. Of course, life sometimes presents us with financial questions. These questions beg for immediate answers. However, we may not be in the position to give the right answers because we may not be having the wherewithal. So our response would be to go for the fastest means of solution available to us in order to be free. In this case, for most salaried workers, it would be loans from financial institutions, and for students, it would be loans from the government. But in doing so, you may be leaping before you look. You may be moving from the frying pan to the fire, especially if the terms are not favourable but you feel pressured. So you take it anyway.

A lot of people chart this path without considering other avenues. Other avenues in terms of their investments, monies from friends or family etc. You don’t have to bare any cost in the form of interest with these avenues. If you borrow from a friend or relative, you pay back the same amount regardless of the length of time it takes. No need for technicalities such as the time value of money, and this surely gives you some relief. If you go in for your investment, there is no pressure at all because it is subject to your whim. So before you go in for any loan, do everything possible to exhaust the aforementioned avenues.

Unlike a sheep, don’t let “them” lead you to the slaughter. A loan should be the last resort.        

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