Pros and Cons of borrowing


Possible benefits:

Helps make ends meet at the end of the month.

Helps to deal with crises or emergencies/unexpected events.

Makes larger purchases possible that would not normally be covered by regular income.

Opens up opportunities that would otherwise be missed.

Allows you access to other benefits and privileges through ‘points.’

Builds up a credit history that makes you attractive to other lenders.

Possible disadvantages:

Have to be careful who you borrow from and avoid irresponsible lenders.

You pay to borrow money: interest can be expensive and it’s easy to miss the small print.

Unforeseen circumstances/life changes may leave you unable to repay debts.

Taking up loan offers or using cards can distance you from the reality of spending and lead to more borrowing – ‘Buy now, pay later’ can seem attractive, but paying later isn’t always manageable.

It can be stressful, draining and put a strain on relationships when borrowing gets out of control.

We borrow money for all kinds of different reasons:

  • Short term borrowing to make ends meet at the end of the month.
  • Medium term borrowing to cover the costs of expensive items like a car, or pay for further education courses (for instance, a student loan).

Long-term borrowing to cover large expenses like a house (mortgage).

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