Living on Credit


Jun 12, 2008
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Jalan Poonpipi
#1
Most of us would take a loan when we buy a car. 5yr, 7yr or even 10years.

For the roof over our heads, we take even a much bigger loan, starting at 10years to even 20years.

As for electrical goods and photo gear, I guess not that many would buy on credit. Except maybe on credit card. That is a separate matter altogether.

Just wonder if living on Credit is a good thing.

But, in the business sector, working on credit is Standard Operating Procedure. You get your goods delivered to you on credit. You sell them on credit as well. You get a bank overdraft. Better still, you get a bank loan. Just that everyone is owing someone else.

Now just imagine if there is not such thing as loan and credit - there would be very few cars on the road! And hardly anyone can afford to buy a house......
 

Jan 6, 2010
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#3
Most of us would take a loan when we buy a car. 5yr, 7yr or even 10years.
There are good and bad loans.

Mortgage are good loans, over time, property price should go up, hence capital appreciation can hedge against cost of your loan. But then if property was purchased during high period, then you are dome.

Education loans are good loans too, over your life time with your career, you get promoted and better pay, hence increased in value.

Other than these two loans, try to avoid other loans if you can, because you guarantee to lose money.
 

adorable

New Member
Jun 8, 2009
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Bury Road
#4
How about loan to expand business and loan for wedding? they good or bad loans?
 

Jan 8, 2009
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#5
sometimes take loans doesnt mean got no cash. its just that the cash can be put to better use. say if u take a car loan @ 4% but with the money for you can get returns of 5%, then it makes sense to take the loan right?

FOr businessess they will always try to get longer credit terms, even if they have moeny in the bank.

I put everything i buy on credit card even if I can pay cash, but i pay them off when they are due in full. So that I can get points. Why not, its getting something for nothing rite (in a way).
 

Jun 12, 2008
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Jalan Poonpipi
#6
other than house and car, better don't live on credit if you have the choice
Like buying FF camera, trinity lenses etc on credit - I guess better avoid that.

But we all know that it ain't a good feeling to owe people money, living on credit and getting more credit to pay others that are due and so forth.

Just that there are those who live beyond their means, even though they earn more than 5k a month. Like having a car loan, mortgage payment with CPF plus cash, annual holidays overseas and so forth.
 

Feb 26, 2003
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#7
How about loan to expand business and loan for wedding? they good or bad loans?
Expanding business would be a good loan if after expansion the extra revenue helps pay off the money you put in.
Wedding uh in what sense? Unless you think the angpaos can help pay off the loan.
 

Kit

Senior Member
Jan 19, 2002
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#8
I think whether if its a good or bad loan depends on how you manage it. You can take up a loan with the best intentions but when you can't manage it, it will turn into a nightmare regareless.
 

Jan 6, 2010
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#9
I think whether if its a good or bad loan depends on how you manage it. You can take up a loan with the best intentions but when you can't manage it, it will turn into a nightmare regareless.
This is so true, can't agree with you more.
 

aryanto

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Feb 16, 2005
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#11
okay ... above is just for fun - this is kopitiam anyway.

now let me say a bit.

A loan, if taken and can generate more money than the payment, for the duration of the loan, is good.
A loan, if taken and consumed, and payment is made using income, for the duration of the load, is not so good. It can be good in a sense that you get to experience the thrill now, before the pain of savings later. Done too often, can be addictive and that is when it becomes bad.
Housing loan if done properly is somewhat in between of good and bad loan.
Renovation loan is more to the bad loan - really - cos paying like $40K renovation to $250K flat is like close to 20% of flat value - which I doubt will make the flat price close to $300K.


Taking a loan for marriage like what is shown at bank advertisement ... :sweat:
 

DrSpock

New Member
Mar 12, 2009
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#12
A word of advice from someone who's been there, done that, went throught hell and back. DO NOT TAKE ANY LOANS THAT YOU HAVE TO PAY INTERESTS, PERIOD!:nono:

When all my businesses collapsed during the great recession in the late 90's to early 2k, I borrowed heavily trying to revive my businesses but not. End up having to slave for 10 yrs just to clear the mountains of debt from my Merc, properties, shops, etc.

The only credit you can take is those interest free like IRAS Giro payment:thumbsup:, some interest free installments and Loans that you can leverage on to MAKE not EARN more $$$ while giving you cashflow. Notice how I say 'Make $' not 'Earn $' b'cos there is a huge difference between the two. One takes all your time and the other you just sit & $ just flows in:lovegrin:
 

Jan 8, 2009
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#13
Notice how I say 'Make $' not 'Earn $' b'cos there is a huge difference between the two. One takes all your time and the other you just sit & $ just flows in:lovegrin:
I like how you made the distinction. Makes a lot of sense. Thanks.
 

ManWearPants

Senior Member
Jul 14, 2008
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#15
One has to remembers that banks are your fair weather friends. They don't hang around when you are down and out. So you should know how to handle them.
 

Gizmore

New Member
Jul 11, 2006
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#16
actually i don't see any harm in taking interest free credit.

the more critical thing is that one has to be aware of their finances. Don't take on credit when your income is unable to sustain.

For example, interest free installment. As long as one has sufficient income to pay off the installment, i really don't see any harm in it.

It is just simple mathematics. Don't take on credit when your income is less then what you can pay later.
 

ManWearPants

Senior Member
Jul 14, 2008
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#17
actually i don't see any harm in taking interest free credit.

the more critical thing is that one has to be aware of their finances. Don't take on credit when your income is unable to sustain.

For example, interest free installment. As long as one has sufficient income to pay off the installment, i really don't see any harm in it.

It is just simple mathematics. Don't take on credit when your income is less then what you can pay later.
You see most of the time, people take on loans when the times are good. It is during the downturn when people lose their job, suffer from the stock market losses, etc. That is the crunch time when you really need the money. Also by being debt free gives you financial freedom, eg If you company decides to promote your arch enemy to be your superior, you can always walk away from the job. Imagine if you have loans to finance, I am sure you will have many sleepless nights after that announcement. Just some food for thoughts.
 

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voxies09

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Apr 11, 2010
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#19
there is good loan and bad loan.. it's normal for ppl to loan money to get something that can or they think can earn more (investment) .. like property market or your wedding or your education.. Hence, it make rich guy become richer..
 

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ManWearPants

Senior Member
Jul 14, 2008
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#20
there is good loan and bad loan.. it's normal for ppl to loan money to get something that can or they think can earn more (investment) .. like property market or your wedding or your education.. Hence, it make rich guy become richer..
I don't know if this idea is driven in to people's mind by financial institutions. I mean a loan is a loan, whether good or bad. You owe people money after taking out a loan. The whole idea of a loan is to allow. you to get what you want faster and earlier. It is like telling people to buy what he cannot afford now. The reality is you are only the owner of the item after you paid up your loan. So whether you are able to reap anything out of it still depends on your ability to pay off your principal loan amount + interests.
 

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