Understand How Loans Work

You will come across good loans and bad loans. Good loans help you build or buy valuable assets. Bad loans charge you very lofty interest and either don't help you buy assets at all or help you buy depreciating assets. Loans can be a huge device to help you build wealth, if used wisely. Predatory lending is when a bank loan official advises you that you can manage to pay for a certain high loan, when actually you might not be able to. You as the loan taker are pleased about being eligible for a higher loan amount as this means you have more funds at your disposal, but when the interest rate goes up and your EMI increases, you might find yourself under pressure of a heavier burden. So go for loan only if you can afford and always remember to have at least 3-6 months worth of EMIs as part of your contingency reserve.