Updated: November 2, 2022
My brother called last month, asking if I could help him pick a laptop for his daughter that she could use for her studies.
Apparently, my niece’s school will continue holding online classes, and their old laptop is already hanging by a thread and could break down soon.
My brother’s finances were hit badly by the pandemic. I know that their family savings fund is almost depleted. So, I was curious how he plans to pay for the new computer he’s about to buy.
“Merong Buy Now, Pay Later ang Home Credit. Installment ko bibilhin,” he told me.
Good Debt, Bad Debt
Debts often get a bad reputation. I have friends who avoid it to the point that they refuse to have credit cards or even take out a loan.
There’s nothing wrong with this financial philosophy. However, leveraging debt can be a useful financial tool if you know how to use it.
Impulse buying and purchasing unnecessary items is bad debt. But using it for urgent and essential expenses, like buying a laptop for your daughter’s school needs, is good debt.
The purpose is what matters most.
Eating a balanced diet, getting enough sleep, and exercising every day will make you physically healthy. You do not have to go into sports, but it is an advantage if you do.
In the same way, monitoring your cash flow and growing your savings and investments will lead to a financially healthy life. You do not need to apply for credit, but there are financial advantages if you do.
For instance, having a good credit score will give you higher chances and faster approval for home and car loans. Additionally, you can negotiate for lower or better interest rates during application.
And while you can just save and invest for these, it will take you much longer to reach your target amount. Furthermore, growing a business is easier if you have a credit line.
Thus, having a credit card or applying for a loan is not absolutely bad for your personal finance. Short-term debts will help build your credit score, which you can leverage to achieve bigger financial goals.
Just remember to stay within my recommended debt-to-income ratio of 30% to avoid risking and hurting your financial health.
Home Credit Philippines
Nowadays, there are a lot of companies that provide personal loans. You can even just apply online or through a mobile app.
However, most of these unsecured loans have high interest rates, and you get no additional benefits or value from them.
In most instances, the borrowed money is for the purchase of an essential gadget, equipment, furniture, or appliance. And if that’s the case, then I believe it’s better to simply buy through Home Credit.
Home Credit allows you to be financially responsible while building your credit score and financial credibility. Plus, they offer value-added services such as device protection, insurance, and family and health protection.
You can enjoy their offers of 0% interest on select items, flexible payment terms, affordability, and accessibility. With Home Credit’s 0% interest offering, you’ll be paying manageable monthly installments based on the standard price of the item with no interest rates to your payments. This is one way for you to make faster progress on reducing debt.
And if you settle your payments on time and have no track record of delays, Home Credit might offer your last month of payment for FREE on regular transactions, making it a reward for customers who have a good record with Home Credit.
Credit is one of the most misunderstood and misused financial tools.
If you know how to use it, then it can help you achieve your financial goals faster and easier. Otherwise, you could drown in debt and experience financial difficulties.
A loan is a power tool like a chainsaw. If you’re careless in using it, you could cut off your fingers; but learn to use it properly, and you can create ice sculptures.
Disclosure: Home Credit Philippines is a brand partner for this article.