When most of us think about loans, we think bad debt and poor financial management. But loans are supposed to help you, not get you into trouble. According to FNB Head of Consumer education Eunice Sibiya, credit can actually be used as a tool to create wealth, if one takes time to fully understand how different loans function.
If you want to take a loan that is going to help you build wealth, you need to be discplined— Eunice Sibiya, FNB Head of Consumer Education Program
The most important thing to do is take loans that meet your financial goals. Perhaps you want a beautiful house, or a university degree to help you land your dream job. The trick is to put a strategic plan in place and make sure your credit record is as clean as possible.
In the 3 months leading up to to applying for your loan, clear as much debt as possible and maintain a positive bank balance— Eunice Sibiya, FNB Head of Consumer Education Program
Here are the 3 loans that can help you grow wealth.
Study Loans - Invest in your future income
To reach your full income earning potential, you need to improve your level of education. A student loan can give you the finances you need to build a career and earn a substantial income. You have the option to pay of the interest of the loan while you're studying, and paying off the rest of the loan when you graduate.
Bond - Use your property to create additional income streams
Applying for a bond is a little more complicated than simply filling out a few forms. You might want to consider a property in a safe area that has the potential to grow your wealth. Look for potential streams of additional income like rental or small business income. Use this extra money to increase your bond repayments every month. This way you can pay your bond off faster, renovate your property to increase its value and significantly increase your future wealth potential.
Business loans - A business generates a lifetime of income
Investing in yourself and your business is a risky step. A business loan is a smart way to set yourself and your family up for a lifetime of income. Start-up loans help you get the business off the ground. It’s the initial investment you need to encourage growth and expansion purposes. A well-planned business loan can help you to acquire assets or pursue additional business opportunities.
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