Some people are actually afraid of going into any kind of debt. Even if they go to the best money lender Singapore, they still hesitate to apply for a loan.
Let’s take a look at four of these common fears people have about incurring debt. Also, let’s explore whether the fears are based on reality or not.
They are afraid they might not be able to pay it back
The biggest fear some people have is not being able to pay off their debts. For this reason, some are reluctant to take out loans.
This fear is actually reasonable. One essential rule of thumb in managing debt is to only take out loans when you have the means to pay them back. If you are not sure you can pay back a certain loan, avoid it.
But if you know this rule and live by it, then there is no reason to be afraid of incurring debt. After all, there is such a thing as good debt if you use it properly.
Interest rates concern them
Interest is another cause for concern amongst some people. They don’t like having to pay interest, so they stay away from debt as much as they can.
Once again, this fear has its merits. If they are already financially struggling, they don’t want to lose more money to interest payments. Anytime they take out loans, there will always be interest to pay.
Unfortunately, there is no way to avoid interest when taking out loans. Think of it as the cost of borrowing money. Loans are products, so interest is like the price tag of the loan. The higher the interest, the more ‘expensive’ the loan is.
But just like other products, you can find cheaper versions elsewhere. So if you really have to take out a loan, find one with a reasonable interest rate. If one is too high for you, explore other lenders. You’ll find another that has an interest rate favorable to you.
They are afraid of harassment by collecting agents
No one wants to be constantly annoyed—or worse, threatened—by collection agents. This fear, though, is not exactly factual. The reality is that legitimate lenders will never harass you. They are prohibited by law.
Anytime a lender uses coercive or harassing tactics to get you to pay up, immediately report them to the Ministry of Law (MinLaw). If they are registered lenders, they will face penalties for harassment. If they are not legitimate, authorities can investigate and prosecute them.
They perceive debt as an entirely bad money habit
Some people also think of debt as something that is always a bad thing. They always think of bad debts and how those debts can ruin them financially.
But there are such things as good debts too. Good debts allow you to make money and build wealth. For example, getting a business loan helps you get your business idea off the ground. Once it makes profit, you can use those profits to pay off the loan. Eventually, you will have fully repaid the loan while your business still earns profit.
That means you will still make money even after you have paid off the loan. That is a good debt. The business you built is an asset.
Conclusion
Incurring debt is not always a bad thing. While some people have their reasons for fearing debt, there are ways to be wise around it. If you use debt wisely, it can even be a tool for building wealth. What you need is the knowledge of what debts are good and how to use them to your advantage.
