When it’s time to make a large purchase – whether it’s a new house or a new game system – you have two basic options. You can either save up for the purchase or finance it.
In some cases, such as with a house or car, it makes sense to finance. They’re large purchases that take a great deal of time to save up for. And often, you need them sooner rather than later.
Other times, saving up is a better option. It costs less over time, as there is no interest and extra fees. And most people feel a greater sense of accomplishment when they’ve saved and purchased the item outright.
Both saving and financing are great options for meeting your goals, but it’s important that you think the process through before making a decision. Below is a basic overview of how each works, along with tips to make either work for your needs.
Saving for a Large Purchase
You’re probably familiar with the concept of saving up for something you want. Most people are introduced to the process as children when their parents are trying to teach them invaluable lessons.
The whole idea is that you see something you want, you make a plan to buy it, and then you find ways to sock the money away until you have the full amount. And if you ever did this as a child, you know just how satisfying it can be to finally be able to plop your money down on the register and take your item home.
There are good things about saving, including the feeling of accomplishment, but it goes beyond that. The world is set up to make consumers want things – at least at that moment. Often, after you’ve stepped away, they realize that they really don’t want it or that it won’t suit their needs.
If you choose to save for the item, you have time to think this through and decide if you really want it. Financing allows you to take the item home immediately, leaving many people regretting their impulse purchases.
Saving for an item doesn’t have to take a lifetime. You just need a plan and some dedication to the cause. Start by taking a look at your current budget and finding areas you can cut down. For example, if you hit the drive-thru every Friday night, try to make it an every-other-week event instead.
You can also pad your savings by picking up a few extra hours at your job or starting a part-time second job. You might also consider a side hustle, such as washing cars, blogging, lawn care, or something similar. And don’t overlook things you have in your home. You can sell clothes, shoes, tools, books, bikes, and more online or at a garage sale to increase your savings.
Financing a Large Purchase
Financing is a convenient way to take care of a purchase quickly. Sometimes, financing is necessary, as you need the item right away. And sometimes, you just want it right now.
In either case, there’s nothing wrong with financing a large purchase, but you do need to understand what you’re getting into. Financing is a loan. This means that you’ll be paying interest for borrowing the money. In other words, you’ll be paying more for the item than the price tag states.
If you choose to go with financing, it’s important that you do so with care. Take a look at several lenders to compare rates and loan terms to ensure you get the best. One good option is MaxLend loans, as they have a variety of financing options and loan terms.
Whether you choose to save for an item or finance is completely up to you. Just be sure that you think your options through carefully before diving in.