Why do Consumers Consider Taking Out a Loan?

The ideal situation for any individual would be not to need loans or credits to undertake projects or purchases. Nevertheless, reality often is different. 

The credit market continues to grow each year, but why do citizens consider getting into debt?

Top 5 Reasons for Citizen Debt

1. Home Purchase: Currently, most citizens consider accessing mortgage loans to buy a house or an apartment. The high cost of housing and the limited savings capacity of salaries drive many individuals to apply for mortgages to access the purchase of a property. It is probably the most important loan ever applied for in your life. Hence, it is necessary to know its conditions well and be clear about whether to opt for a variable or fixed rate, and for a shorter or longer term depending on each buyer’s personal situation.
2. Debt Consolidation: Some people apply for credits to consolidate existing debts into one with the aim of simplifying payments and obtaining a more favorable interest rate. This type of move requires a prior study on pages like Prêt-Équitable to know the best opportunities from banking entities, credit agents, and the market.
3. Car Purchase: Car loans are common and habitual. In fact, many dealerships have their own financiers to help buyers with the conditions and access to them.
4. Education: In countries like the United States, it is common for students to apply for loans to finance their education, covering tuition costs, accommodation, and other related expenses. “There is increasing international mobility when it comes to studying, especially postgraduate courses. That’s why a recurring loan is the one for studies,” explain experts from the financial sector.
5. Renovations: When already owning a home, it is common that after a certain time it requires more in-depth maintenance and that’s when new renovations and even more structural repairs are considered. The advent of new, clean energy pathways is making many people look for financing to update homes and even revalue them.

These are just some of the points why French society opts for a line of credit, but having said that, several aspects need to be taken into account.

Firstly, it is key to know the amount that will be requested and the interest that this credit will entail. 

Knowing the repayment period and the opening or closing rates is also necessary to be able to make a final closed price that serves to see if, in some cases, it is worth applying for the loan or waiting and managing to make a savings cushion to avoid increasing the application.

In conclusion, there are always alternatives to reduce the amounts that burden families. This is based on a savings schedule that, although not simple, is viable.