Should I take a loan?

Most may take one to buy a car, to splurge on a trip, pay for their education or to do renovations....no problem there. However, loans can also be a positive way to save and/or build your credit rating when done right. Recently I was investigating a loan as a way to save and it is definitely an effective way to do so. There are financial institutions that are willing to work with you even without having to bring your own collateral.

A key element is being able to make your payments on time therefore before entering the loan agreement, ensure that you have the finances coming in to dedicate to this payment for the duration of the payment period.

As a personal preference smaller loans should be repaid within two to three years while bigger loans can extend to 5, 7 or 10 years. This cuts back on the amount of interest you ultimately pay. I would not suggest less than two years because if part of the goal is building a credit rating, we need to keep that in mind and there must be reasonable time for this to be established.