Smarter Consumption: How to Borrow Without the Pressure of Debt

In the current economic climate, borrowing has become a more familiar solution for achieving personal aspirations or addressing financial needs such as shopping, home renovations, or even investments. However, not everyone knows how to borrow smartly and manage loans in a way that is rational, comfortable, and free from excessive pressure. If you are considering taking out a loan and want to ensure that it does not result in financial burden, this article will provide practical and effective tips to help you make informed decisions—from determining when to borrow, preparing thoroughly before borrowing, to managing loans with confidence. Let’s explore!

When Should You Decide to Borrow?

Deciding to borrow money should be carefully considered based on actual needs and your capacity to repay. You should only decide to borrow under the following circumstances:

In Cases of Urgent Financial Needs

Unexpected financial situations such as medical expenses, home or vehicle repairs, or other urgent expenditures may arise. In such cases, borrowing can be a timely solution to overcome immediate financial challenges.

When You Have a Clear Plan for Using the Funds

If you are borrowing to invest or expand your personal business, it is essential to have a clear and detailed plan for using the borrowed funds. This will help you optimize the loan and ensure that it generates returns or long-term value rather than becoming a financial burden.

When You Have Assessed Your Financial Capacity

Before borrowing, you need to ask yourself: Can I afford to repay this loan? If the loan negatively impacts your monthly income and creates financial stress, then reconsider the borrowing decision. Only proceed when you have a stable income that will not affect other essential expenses.

Principles for Borrowing Without Financial Pressure

To avoid the stress of debt, it is essential to have a clear plan and manage the loan responsibly. Below are some guidelines to help you borrow money while maintaining financial stability:

Conduct Thorough Research Before Applying

Before applying for a loan, research and compare various financial products in the market. Evaluate interest rates, loan conditions, service fees, and other associated costs to choose a product that aligns with your needs and financial capacity.

Read the terms carefully before signing any loan agreement. Make sure you understand the interest rates, fees, loan tenure, and other conditions specified in the contract.

Here are some additional points to consider:

• Select a Suitable Loan Tenure: Choosing an appropriate loan tenure is crucial for managing financial pressure. A shorter tenure results in higher monthly repayments, while a longer tenure increases the total interest paid. Choose a loan term that matches your income, ensuring manageable monthly repayments while completing the loan within a reasonable period.
• Opt for Flexible Loan Packages: Many financial institutions now offer flexible loan options that allow you to adjust the repayment term or monthly installment based on your financial situation. If possible, choose loans with such flexible features, enabling you to adapt to changing circumstances without falling into financial distress.
• Choose Reliable Borrowing Channels: Banks and licensed credit institutions are trustworthy sources of funding, as they comply with regulatory requirements designed to protect borrower rights.

Today, one of the convenient borrowing options is through online loan applications like iShinhan from Shinhan Finance. This application offers a fully digital loan process, allowing you to easily manage everything from submitting documents to monitoring your loan.

Take sufficient time to conduct thorough research before signing any loan agreement. Depending on the loan size and purpose, the research period should range from a few days to a few weeks. Above all, remember this key principle when borrowing:

Only Borrow Within Your Financial Capacity

A fundamental rule is not to borrow more than you can comfortably repay each month. Calculate your monthly repayment (including principal and interest) to ensure it does not exceed 30-40% of your monthly income. This helps maintain sufficient funds for other living expenses without undue financial stress.

Avoid Borrowing from Multiple Sources

Why? Because managing multiple loans with different interest rates, fees, and payment schedules can be confusing and increase the risk of missed or late payments. Without a clear financial plan, borrowing from multiple sources can lead to a loss of control over personal finances, as monthly repayments accumulate across various loans, potentially causing significant financial pressure.

Monitor and Manage Your Loans Efficiently

Monitoring and managing your loans are essential to avoid financial mismanagement. Establish a tracking system for your loans, including due dates and monthly payment amounts. This habit helps you maintain control and avoid missed or late payments, which can result in unnecessary penalties.

Borrowing is not merely a temporary financial solution but a decision that requires careful planning. Only borrow when necessary and allocate sufficient time for thorough research and financial calculations. Most importantly, ensure that the loan does not become an excessive burden that affects your quality of life. Be a prudent consumer by utilizing financial solutions that are aligned with your capabilities.