03 May

It’s easy to get a loan unless you need it. ~ Norman Ralph Augustine

You are back once again in the realm of unsecured personal loans. You know the script by now; don’t touch if your interest is in luxuries for own sake. Ah, you’ve tried hard to fight that temptation but to no avail. You’ve actually given your best shot. It’s just that these funds are tantalizing bordering on your account. What the heck, with your pay slip as the only security, you go home with an account chocking with currency.

Next time you’ll certainly not take another loan. Well, maybe.

Never take a loan for things you want, don’t need – now that’s a statement that has been said time and again it’s actually in dire need of wrinkle cream. And yet, look at the banks around you, just look at their loan advertisements; if you need money for a holiday, to furnish your house, to facilitate your grand wedding, not forgetting a head-turning automobile, as you relocate to a rental house in a respectable neighborhood, come to us. Let’s take care of that mess for you.

Baloney! Banks are awash with liquid money to give, even in this era of high interest rates. As long as money is taking refuge in their accounts, it doesn’t help them one bit. They’ll woo you at any cost if they have too. They’ll present unto your mortal mind graphic images that are the quintessence of your dreams. That’s how they make their money.

It’s all about their bottom line!

As long as you can present proof of employment, as long as you earn a decent monthly salary, as long as your net income is deemed sufficient and you have a working account, well, viola! Money in the bank account! Ka-ching! You don’t know what to do with it? Please, take the money as you think about your world of opportunities. What can be more important than having six to seven figure amounts being zapped into your account in jolting (well, not really) speeds?

Oh, and remember, you can always get up to six top ups, one every six month, if your credit record is clean. Sweet, or so you think. Commissions galore, the bank’s salesperson thinks.

Hold it. Unless it’s very necessary, or you have this grand idea to invest in income generating productive assets, or you want to further your education, et cetera, such easy loans can leave you with burnt fingers. Seriously. Monthly installments can suck your income better than ticks and aphids, making you have a love affair with the treatment table, or even leave you dead and buried. They can act as a catalyst to marital woes or a job search because you are always broke by the second week of the month.

A splurge is always more likely to occur with easy money, leaving both your pay slip and bank account stripped and their privates exposed. Any loan to buy depreciating assets like furniture, cars, electrical appliances, electronic gadgets, or spent on image rights, better half, entertainment, trips et cetera, can leave you poorer. Any increase in interest rates in our unpredictable financial environment becomes an additional expense that eats into or compromises your savings.

Here’s the thing. Loans aren’t bad. They can never be. It’s what you choose to do with that credit that can bring you joy or smack the living daylight out of you by crippling your financial wealth. In essence and when put into good use, loans can be considered as saving schemes, well of course with interest rates as the cost.

Instead of saving till you die of old age to purchase a piece of land, venture into business or buy that asset that can generate some moola, loans can turn that into reality. But the funds must be channeled towards production assets or investments that cushion you when things become elephant. Talk of economic crisis, high interest rates or being laid off.

It doesn’t help being left with a big loan to pay for the next number of years when all that principle was used in consumption, more so if you default and the Credit Reference Bureau blacklists you for the next seven years. You know what that means, right?

When applying for that personal unsecured loan, you need purpose, self control, logic, options, wisdom and a sober mind, sprinkled with a beloved’s advice, or two, so as not to stew in your own juice.

Or maybe, it is I who needs to get that wrinkle cream. Which brand was it again?


Posted by on May 3, 2012 in Personal Finance


5 responses to “Tangled

  1. Wanjoro

    May 3, 2012 at 11:03 am

    great article as always you hit the nail right on the head

  2. JustPaid

    May 3, 2012 at 11:28 am

    The article is a smack to the back of our heads for us who are waiting in bated breath for the monetary policy committee to reduce the CBR so that we can up more loans for wants instead of needs… good stuff!

  3. Alex

    May 3, 2012 at 1:15 pm

    I know you’re right Munene, I know. But they keep dangling the (not) easy money infront of us, tempting us with the promise of ‘no security required’, and then they put a picture of a nice sofa in the ad, with the matching carpet and very big flatscreen…its hard not to succumb to the lure of consumption. Talk about a mirage no?

    Well said sir.

  4. Project44

    May 3, 2012 at 9:06 pm

    Aaaaah….the discipline of it all. As you said, it is about what you plan to do with, so long as you won’t end up trying to sell a greenhouse ‘without a roof’ ;).

    Good piece.

  5. anniespice

    May 4, 2012 at 2:00 pm

    Well said.

    And if you borrow against your salary, God forbid you loose your job the same guys who were smiling at you to take the loan transform into bloodthirsty mongrels, who threaten and harass you by the minute. Your interest rate is increased twofold because you have now become a risk… you just can never finish paying off the loan.

    wrinkle cream…. lol


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