Borrow Money When You Don’t Need It

Borrow Money When You Do Not Need To

I know this may sound crazy but the best time to borrow money is when you do not really need it. If you are in desperate need of the money banks can get scared off, you may be unemployed or on short time and those things will go against you when you fill out your loan application. An example of this is if you are buying a car. If the car is $10k and you have managed to save it all up (well done) you may think buying the car for cash is the best idea. No more making payments, paying interest and all you have to do is make sure you have the cash to keep the car running.

Actually it makes sense to borrow the money to buy it, maybe put 25% down or even a full 50% and borrow the rest. By financing a good part of the purchase you can keep your cash in the bank earning some interest, you will have it available for emergencies and as long as you never miss a payment you will be helping improve your credit score. Since you are putting such a large amount down as a deposit and you probably have a very good credit score (as most regular savers do) you should be able to get a car loan at a very preferential rate. So you win in every way possible, you still have a good nest egg, you get a new car, your credit score will improve which will help you when you have to take out a mortgage.

It may seem that by borrowing money when you have money is unnessercary but the fact is that if you suddenly need $5k for an emergency it will take time to arrange the loan. You shoudl always keep some money in an emergency fund taht is easy to access and won’t punish you if you remove any of the money.

Learning how to use money and how to manage credit is vital, if you can keep a high credit score and money in the bank then life is always a bit easier. You will find that loans are cheaper and mortgages are easier to get when you need them. Obviously if you can do everything with cash only then more power to you but if you need to borrow money then you should do you can to get the best deal possible.