Saving…..through a loan

The idea of a loan we have all come to know is where we receive a lump sum and then make payments subsequently to clear the outstanding amount. How about using a loan facility to save? Think of it as the traditional loan process in reverse – pay for a period of time and collect later. I came across this concept while exploring my saving options and it stayed with me because there was no need for my own collateral. So, in essence, you would make monthly payments for a pre-determined period of time (e.g. 2 years) and the “loan amount” will be held by the bank and only be redeemable once all payments are made.

What about interest? The monthly payments do include the interest charge, however, from what I have seen in my research, the bank rates are not unreasonable. For this purpose, I like to consider the interest as a “management or holding fee” mainly because the transaction is being handled by a bank and as a result, there is zero chance of the paid funds being tapped into randomly. For those of you who may have difficulty in saving, this option is a great way to achieve that goal and ensure that the payments being made go toward the intended result. Once the loan is paid up, the lump sum is received and you can enjoy your funds.

If you want to know more, feel free to email me.