We are living in a time where there are a lot of digital loan apps. A smartphone and a lending app is all you need to be able to access a loan. This apps know how to advertise themselves especially when it is mid-month and you are broke. These apps have landed many people in debt and some have also been blacklisted by the Credit Reference bureau.
The introduction of digital loan apps is a good idea and it can save you in case you have an emergency or in cases where you need some quick cash. It can also be destructive and leave you in huge debt if you are not careful. Due to their addictive nature, you get a sense of security that you can easily access money when you need to. You therefore end up spending on non-important things.
Knowing that you can easily press a button and get some cash right into your phone can trigger impulse buying. When you come across something nice yet you don’t have the money to buy it, your mind goes back to the lending apps and tells you that you can actually get the money and buy that good or service. Since it is an impulse decision you will find that 99% of the time you don’t actually need that service or good.
When you borrow, most of these apps give you a maximum of one month while others give you two weeks. Others do ask you to pay in weekly installments. It is usually sweet and rosy till payment time. These payments are usually with an interest rate of a certain percentage on the money borrowed.
Now that it is time to pay yet you don’t have money to pay your debt, you end up enrolling into another digital loan app to help you pay off debt from the previous app. The trend continues and you end up with a huge amount of debt. The debt accumulates from the interest that comes with each loan that you borrow. You have now entered the debt catch up phase where you need to clear your loans before you can embark on other meaningful projects.
When you work, you are actually working to repay the loan. The money that you are actually sending towards your loan repayment could have actually gone into investment. When you are finally done with debt payment and now want to invest, you find that the investment is gone. Because of debt, businesses have failed to start, people have failed to go back to school etc.
Debt has the ability to make you stagnant. You may seem okay but your life is actually not progressing especially when you keep taking loan after loan. It is usually a good idea to evaluate a situation before taking that loan that might end up robing you of your time, money and lucrative investments.