Huge Loans

Discussion in Loans started by gracer • Feb 16, 2016.

  1. gracer

    gracerActive Member

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    I have a friend who just applied for a business loan from a private institution so she could buy a lot for her business. She plans to put up a small building where she could do business in the lower floors and at the same time live in the topmost floor.

    Her vision requires a very big amount of money but she's willing to take the risk because she wants so bad to open her business within this year. It could take years before she would be able to pay off her loan but she's amenable to it.

    How about you guys? have you ever loaned a huge sum and how did you use it? Were you able to pay on time?
     
  2. Lushlala

    LushlalaWell-Known Member

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    Well, at least she's using it to finance something substantial, something concrete. I've taken out a big loan before, but I doubt it was anywhere near as big as your friend's. When I decided to move countries, I knew I had to settle all outstanding monies first because otherwise I would have inevitably ended up defaulting because of the exchange rate i.e it would've worked out a lot harder from where I am now. So yes, I settled my loan and now live debt free. The next loan I get will be HUGE and will be for a house.
     
  3. Denis Hard

    Denis HardWell-Known Member

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    My sister took a loan a few years ago. They started some business with her husband but the business collapsed. They took a few more loans from credit unions hoping that a new venture would prove profitable. They failed again and since then till now they are still trying to pay off the loans.

    Having watched them from the sidelines and seen how hard it can be to repay these huge loans I don't think I'll ever take a loan.
     
  4. Onionman

    OnionmanActive Member

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    I've always been too scared to take out large loans ever since I had a credit card bill that took 7 years to pay off. Part of the problem was that I wasn't earning enough money, part of the problem was my lack of education on the topic. I hope she's done her research to make sure she knows what kind or returns to expect from her business and has some decent education on the topic. If she doesn't have decent information to back it she could get herself into deeper water than she expects.
     
  5. gracer

    gracerActive Member

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    I have the same feelings about loans too. I have never tried applying for loans because I'm afraid I wouldn't be able to pay them off on time and I would just end up stressed and sleepless at night just thinking of how I would be able to pay my loans.

    I just heard from her and she said she hasn't applied for the loan she wants yet because her husband is hesitant about it. He told her that it would be impossible for them to settle a very big loan even if they use his retirement money soon. She's still very much interested but her husband is usually the major decision maker in their family so she's basically waiting for him to approve of her decision right now.
     
  6. Hedonologist

    HedonologistActive Member

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    I have never loaned over £1,000. and I have never loaned anything from a bank. I loaned £800 for car insurance from my parents, but made a repayment plan and paid it back on time.
     
  7. gracer

    gracerActive Member

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    Funny because I also do that with my parents too, I "loan" money from them if that's what it's called. :) There's this one time, I had to borrow $1000 from my mom so I could pay my insurance which was already due at that time and I still didn't have enough money on hand. I've already paid it back though so I guess that makes me a good payer. lol Other than that, I never loaned anything from any company or bank ever before.
     
  8. explorerx7

    explorerx7Active Member

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    Sometimes to get ahead you will have to be bold and take the plunge, because if you don't try you won't enjoy success.I had obtained a large enough loan which sometimes is posing a challenge to service. However, a person should not measure a situation based on another person's yardstick, so what is prudent is for her to do her due diligence and to formulate a backup plan in case the venture should probably run into difficulties.
     
  9. xTinx

    xTinxWell-Known Member

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    Actually, loans are a good move if you intend to use the money as initial capital for a business venture. I used to have a "loan phobia" because growing up, my parents had to make ends meet just to pay off their housing loan while sending us off to expensive private schools. We had a hard life then but thankfully we've managed to pull through.

    When I grew older, I realized that as long as you intend to increase and profit from the money you borrowed, rather than use it for self-serving ends without any ROI at all, taking a loan can be worth the risk.
     
  10. gracer

    gracerActive Member

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    I have quiet the same fear like you did until now. Maybe the only reason I would ever apply for a loan too is if I find a really good business venture that I would find to be worth taking the risk. As you said, if one has the intention of using the money he/she will borrow in a profitable way, then I guess it's really worth the try. I have also seen my dad spend sleepless nights because of his huge loans and wrong decisions in life that's why I'm very wary when it comes to this area. I don't want to live my life full of worry because of constantly thinking on how I could pay a loan that is way beyond what I could pay.
     
  11. Corzhens

    CorzhensWell-Known Member

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    I'm not being a know-it-all but I don't think that's a good business strategy. A loan means interest and with that huge loan means a big interest payments in return. There is a high probability that the profit of the business would just go to the interest payments. And what happens if the business wouldn't prosper? How can the mortgage be paid? So she would run the risk of forfeiture. Maybe it needs another round of thinking.
     
  12. xTinx

    xTinxWell-Known Member

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    That's why taking out a loan requires thorough planning. Conduct extensive research, particularly if the reason you're applying for a loan is to fund a business. Weigh the pros and cons before finalizing your decision. Find an industry that's not affected by recession or inflation issues and then pre-calculate your ROI. You'll have a pretty good idea whether it will work or not. If you have doubts, consult a financial adviser. They'd usually recommend opening a franchise because it's safer that way. Good luck in your business endeavors!
     
  13. gracer

    gracerActive Member

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    My friend is still on it though. Until now she's still trying to find a suitable property where she could put up her business but finding one in a crowded city nowadays is next to impossible. She found a good building the other month but her husband told her it wasn't worth the risk because they would only be buying the building with the lot still being under the local government's name. They would be borrowing a huge amount for something that won't really be theirs in the end so the husband backed-out.

    Thanks xTinx! :) In relation to this, I have actually looked into a bank's business loan offers and they say they support franchise loans even without any collateral. I guess the franchise will be the one to serve as collateral. It is a nice offer especially for beginning entrepreneurs and I think it's worth a try for me someday.
     
  14. morgoodie

    morgoodieActive Member

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    The only loans I have taken out are for a house, a car, and my student loans. My student loans are hard to pay because I do not have a job right now and they want a lot of money each month. I still pay on my car loan and I have another year to go on that and it will be paid off. Cannot wait for that to happen as it will mean less money going out each month. I have had to bankrupt my house so I do not pay anything on that anymore. I do not want to be in debt anymore and probably will not take out another loan.
     
  15. gracer

    gracerActive Member

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    I know, right? Having loans in mind that you have to pay each month is just so stressful. I have seen some friends who end up with almost no cash-in-hand each month because most of their salaries go to their debts. Having no money in your pocket because of the consequence of having a huge debt could be depressing and pitiful. I have learned that lesson from my dad who was used to having huge loans but end up losing nights of sleep because thinking about his debts won't let him have a good night's sleep.
     
  16. remnant

    remnantActive Member

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    I have never borrowed a huge loan but there are numerous instances of people who have done so. I know for a fact that before an institution awards you a huge loan, it is consequence of proof of creditworthiness as a result of them having advanced you smaller loans and repaid.
     
  17. Lushlala

    LushlalaWell-Known Member

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    OMG that would petrify me! I hope your sister and her husband have finally managed to dig themselves out of the huge mountain of debt that they accumulated? That's the annoying thing about loans, they very quickly spiral out of control. I think with ours, we were almost certainly heading that way because banks don't help either. They are relentless in 'offering to help,' by digging you a bigger hole; always offering 'solutions' that mean you have to take a bigger loan to 'consolidate' and clear all your other debts, but in actual fact means your debt just keeps growing not decreasing!!!