Does easy credit make people richer or poorer?

[AprilioMP]

Nowadays we can see the ease of borrowing, so a person can easily get a loan for business purposes in various amounts. Now the question is, does this ease of borrowing really make people rich or does it lead people to become poorer?

I think these things depend on the person taking the loan. If a person collects a loan to start a small business and if he gradually turns his small system into a big business through his strategy, then he will easily be able to repay his loan with a part of his profit, but if that person takes a loan unplanned and takes more loans beyond his means, if he cannot properly use the money from that loan for business purposes, then his business will suffer, as a result of which he will not be able to repay the loan on the one hand, and his financial condition will be worse than before.

For the initial stage, you've already found the answer to the impact on business owners of the ease of obtaining loans in the desired amount. The statement that it depends on the purpose of the borrower, and the purpose for which the loan is being used, is the determining factor.

Ease of access doesn't necessarily determine whether a person will become rich or fall into poverty. In my opinion, the ease of obtaining loans for additional capital only provides a stimulus or a reaction to the ongoing business process. If additional capital isn't needed, it means the existing capital is sufficient and can be reinvested depending on the strategy and financial management implemented. This ultimately depends on a business's ability to understand and master the market. Mistakes and unwise decisions about managing or obtaining loans can lead to bankruptcy and poverty.

[abel1337]

There are different kind of loans and there are loans that are actually not worth it even if you are planning to use it on your business or something that will generate you money. Also credit conditions varies depending on the country.

Currently there are few credit companies that are offering me easy credit loans even if I'm not asking and I don't usually entertain those since it doesn't have a good repayment terms and some has absurd interest. These are from loaning companies and not from banks. Banks usually has a fair terms on their loans but people should usually needs to apply in bank first before taking out a loan. People who usually falls for loan shark kind of loaning options are either desperate for money or don't understand the terms. Loan shark type of loans are definitely gonna make people poorer.

Borrowing should be smart and unfortunately there are people who aren't financially educated enough to understand the risks involved which makes them poorer. But those who understand how to take out a loan correctly, they are usually the one who takes advantage of it and becoming richer from it.

[#CapsLOck]

Balance of cash flow is an important consideration. Not only on the profitability of the business. Even though things look good on the bottom line, a business could still lose money if customers start paying their bills late or costs are higher than they anticipate. It is important for a person to work out what they could do if they had a few poor months rather than just a few good months. The opportunity of easy credit is there. But a realistic repayment plan helps you determine if it's going to be an asset or a liability.

[Japinat]

If you take a loan and you are unable to repay it, then this loan will make you poor.
If you take a loan and you have a source of income to repay the loan, then you will not be poor. However, what you use the loan for is also important. If you take a loan for a small business or you spend it on capital growth in some other business, then you have created a source of income and you will be able to repay it gradually. But if you do not have any source to repay the loan, but you have spent the loan money unnecessarily and this loan will force you to do it for longer, as you will gradually become poor.

Regardless if you are able to pay the loan or not, taking a loan without concrete reason or purpose, still that could only be a waste of money and opportunity. If you keep doing that, you will mess up with your finances and eventually fall into poor financial situation.

But if you prepare a good plan and set realistic goals, taking a loan might lead you to be more productive and increase your potential sources of income.

The outcome clearly depends on how well you utilize the funds, some will go to liabilities that do not profit, while others may use it to fund a business or invest in profitable assets.

[TheUltraElite]

The opportunity of easy credit is there. But a realistic repayment plan helps you determine if it's going to be an asset or a liability.

As soon as someone sees that the flow of money is no longer a problem right away, even if it is going to hid doubly hard later, the person will attempt to spend that money to buy stuff they dont need.

On the other hand, if you restrict cash flow to a person, that person can become frugal and spend only what is needed to survive.

Credit cards exist because the companies running them know the psychology of spending, if you give up that control to these companies you will be running in debt beyond the end of your life. But there is always a choice.

[viljy]

The purpose of lending is to support consumer demand, not to help someone’s business. Therefore, it’s easy to take out a consumer loan, especially in the form of a credit card. But it’s much harder to get a loan for business development. Why is it important to distinguish between these two? Because only a fool would develop a business using money from a credit card at exorbitant interest rates.

Sometimes the state subsidizes preferential loans for business development (but if the business doesn’t go well, this can lead to charges of fraud and a criminal case - you will never be able to prove anything to the state, because in the eyes of the state, you are always a fraudster, even if you are Paul the Apostle). Therefore, if you have a good business plan, it’s better to contact a bank directly or try to find investors (if you have some unique idea).

As for the question of wealth or poverty, consumer loans (which are easy to obtain) mostly lead to poverty because they are taken out mainly by poor people. Debts only grow over time, which exacerbates poverty.

[fredericktaylor]

People rise up using their intelligence and fall down due to their mistakes. So it is very important to understand that before we do anything. People have endless needs. Some take loans for their needs and some for their unnecessary needs. I think it is much more difficult for a person to repay the loan properly than to take a loan. There are many people who are influential in society but they have taken more loans than they can afford due to which they could not repay the loan properly. As a result, high interest have surrounded them and as a result, they have lost everything to repay the loan, so take a loan that you can repay with your own strength. Mistakes teach people but some mistakes destroy people from which there is no way back.

[blockman]

Conducting business and investing using debt, particularly interest bearing debt, it was never in my plans or options, too risky especially allocated for starting a business or an investment of an experimental nature.

Investing using debt is not ideal. I've seen a lot did this mistake and the majority of them fell into the same problem. They cannot bear the interest and the profit margin that they're getting. Someone who's starting a new business shouldn't use a loan for their beginnings. There is a reason why the successful people call theirs as humble beginnings. Whatever they had during the start of their business, they've used it as their resource and didn't take any loans at that time. But as soon as the business starts to boom, and there's a need for additional capital for growth, and cash flow seems to be stable. Then, that is the time that they're not going to face any trouble in asking for loan to invest.

[Tamaperdana]

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I think these things depend on the person taking the loan. If a person collects a loan to start a small business and if he gradually turns his small system into a big business through his strategy, then he will easily be able to repay his loan with a part of his profit, but if that person takes a loan unplanned and takes more loans beyond his means, if he cannot properly use the money from that loan for business purposes, then his business will suffer, as a result of which he will not be able to repay the loan on the one hand, and his financial condition will be worse than before.

Snip

This really depends on the person doing it. Borrowing money is clearly a high-risk activity,, even if the money is used for business. We all know that running a business is not as easy as it seems.. It requires knowledge and experience to make everything run smoothly. So, borrowing money for business capital is clearly very difficult for me. Basically, I don't like doing things like this, as it makes me mentally exhausted. Believe me, borrowing money will weaken our mentality, because every month we are chased for payments, and that is a must. It's still better if the business is running smoothly, but what if it isn't? Yes, we will be confused by it. So, with this in mind, I think if you are not ready to take a big risk, my advice is never to take a loan for business capital. Because it is unhealthy if you don't have the capacity to survive it. So, it's better to start a business with a small amount of capital, as long as it's your own money. It's more enjoyable and more relaxing to run.

[Leahized]

Nowadays we can see the ease of borrowing, so a person can easily get a loan for business purposes in various amounts. Now the question is, does this ease of borrowing really make people rich or does it lead people to become poorer?

Nowadays, while taking a loan is accessible, there is no guarantee of profit in business. I don't know, which organisation you are referring to, but if you take a loan through a bank. You have to return it within a specified time. However, any individual seeking the bank's assistance may not get a loan because some collateral must be kept. Alternatively, a reference from a large company may be required. Nevertheless, if a small businessman takes a loan, he may suffer due to business downturns. Therefore, such a business should be chosen that can be profitable through management in efficiency and discipline.

In this case, my advice is that it is better to do business according to one's ability without taking any loans. Because we are never sure that we can be profitable in business. Here, both profit and loss exist. Since you aim to start from a small business, it is better to start with a small amount of money. Because interest becomes a major problem in any business.

[UpTober]

I think easy credit encourages frivolity. I speak from experience. Once people can easily assess loan, they will request above what's necessary for what they need the cash for. To be sincere, I won't encourage anyone to seek loan if they can help it.

By the way, borrowing from friends or families is far better than borrowing from banks. In my country, microfinance banks charge as high as 20% interest rate on loan. And I find that crazy. If you're going to make it easy for me to assess loan, you should equally reduce rate. No loan facility should be a replica of Shylock. Sadly, that's their reality.

However, loans play a big role in business strategy, for example, you start a new business and you have a fund of $100 to start this new business. If you start the first phase of the business with this $100 fund, then you will not be able to invest in the business as per your plan, which will result in less profit from that business. Similarly, if you have $100, if you take another $200 loan and start a business with $300, and if you think like a businessman who started with that $100, then you can make double the profit, by doing this, it is possible to repay the loan easily from the profit but later with installments. If we look at big businessmen, we will see that every businessman has a lot of money, they take loans because it works as an advantage in their business. But yes, the most important thing is that we need to understand the right management, then only then can the loan be a blessing for us.

[Uhwuchukwu53]

Easy credit or loan has it way of performing the two mentioned state of being to human life, some take loan without investment to which the loan interest rate can be covered while making little profit from the loan,  I speak out of experience loan or easy credit has made some rich and have also render some into poverty where what they presented as collateral which was their last hope was taken and they started from square one, some take easy credit for house rent travel and for pleasure like hotel luxury such loan will amount to poverty because it's yeilding nothing for pay back but sucks away from you by paying interest without any direct income coming through the loan in my opinion the two condition is what easy credit is capable of doing all depends on the individual who goes for it usage.

[ruykeri]

Balance of cash flow is an important consideration. Not only on the profitability of the business. Even though things look good on the bottom line, a business could still lose money if customers start paying their bills late or costs are higher than they anticipate. It is important for a person to work out what they could do if they had a few poor months rather than just a few good months. The opportunity of easy credit is there. But a realistic repayment plan helps you determine if it's going to be an asset or a liability.

You are right. Just thinking about a few months of profit is not enough. Before starting any business, we should see how long it will be able to give profit. For this reason we should not start a business with a loan and spend all the money on any one product at the beginning. You should start a business on a small scale with a small amount. If there is profit, then you should invest in the business again with that profit and move forward. Because if you invest with a very large amount of funds at the beginning then if there is a loss it will not be possible to recover it. There will be no opportunity to repay the bank's loan. You will be financially more damaged. Therefore, you should not take a risk of a very large amount. And starting a business with some necessary products based on the area, which are used for daily use by people or those products are sold regularly, can be a good step. Because since the sale of those products will be in every month, it will be possible to repay the loan whether the profit is less or more. And you should not start a competitive business at the beginning. Because there are many experienced traders in the market. It will not be possible to get ahead of them at the beginning. So first, you should focus more on gaining experience and knowledge. It is logical to start with a small fund and increase the scope of the business according to your ability over time.

[Inwestour]

Nowadays we can see the ease of borrowing, so a person can easily get a loan for business purposes in various amounts. Now the question is, does this ease of borrowing really make people rich or does it lead people to become poorer?

I think these things depend on the person taking the loan. If a person collects a loan to start a small business and if he gradually turns his small system into a big business through his strategy, then he will easily be able to repay his loan with a part of his profit, but if that person takes a loan unplanned and takes more loans beyond his means, if he cannot properly use the money from that loan for business purposes, then his business will suffer, as a result of which he will not be able to repay the loan on the one hand, and his financial condition will be worse than before.

Different banks or lending institutions give loans on different conditions or at high interest rates, I think those who take loans should seriously consider how much interest they have to pay from where they are taking the loan or other conditions. If a person knows these things well and can use the money properly after taking the loan, then this loan can change the position of the person otherwise his condition may get worse.

I believe that easy access to credit does more harm than good in most cases. Some people argue that when someone urgently needs money, taking out a loan can help them get through a difficult situation. So there are people who see it as something beneficial.

But I believe that a financially responsible person should try to avoid getting into such situations in the first place. They should always have personal savings and an emergency fund that they can rely on when things go wrong. Any loan, even one that is easy to obtain, can be the first step into a debt trap that can be extremely difficult to escape from.

[crwth]

I think it's only one side that is going to get richer, just because it's only going to be the people who would be able to propagate or grow the money that they get. I don't think banks would lend to people with bad credit and make them even poorer.

Those who can borrow are probably business owners or people who have a plan for what to do with the money.

The easy part is probably just a really small amount of money, and banks could lose it.

[drangos]

A key consideration is not just the profitability of the business. But cash flow. It is possible for a business to be profitable on paper but not to be able to pay back a loan. If things like customer delinquencies or unforeseen expenses arise. One should determine if the business will be able to pay each installment of the loan. Even in a down month before borrowing. Easy credit is a chance. But it also makes it easy not to realize that there is a risk. The actual distinction lies in having a repayment plan that actually works in the event that things do not go as they planned.

[Su-asa]

If you don't have access to a loan and you are poor or have no other way to raise money for a business or a startup you are going to most likely remain poor, the likelihood of you making it is low, now if you are poor and you have access to getting a loan now your chances of getting rich has increased although it depends on the person getting the loan also the business or what the person wants to use the loan for but primarily you have been given a chance to make it something you wouldn't have had if there was no easy access to getting a loan.

That's actually a very wrong analogy to make because getting a loan and starting a business doesn't automatically increase the chances of becoming rich in most cases. At the end of the day it all depends on the kind of business you are starting and also the terms and conditions of the loan. I know someone that started a business with a loan that she collected got from an organization but after a few years of doing the business the most part of the money still went back to the loans she had to repay. This doesn't really work for everyone.

[Freeveto]

Different banks or lending institutions give loans on different conditions or at high interest rates, I think those who take loans should seriously consider how much interest they have to pay from where they are taking the loan or other conditions. If a person knows these things well and can use the money properly after taking the loan, then this loan can change the position of the person otherwise his condition may get worse.

Quick loans come with a very high interest, and many people are just going for the loans simply because they are easy to access despite the interest, and some people don't usually pay back, yet these institutions keep giving them the loan because if some of them pay back, they are making back their money.

But can all these quick loans make one richer? NO. I don't think so because the interest alone is something to deal with, and after paying back, the start another life again. It will make you poorer; it is better to stay calm on anything that is not important instead of taking loans to cover some wants that are not important so that you can hustle and find way to be successful.

[savetheFORUM]

It will depends on ones mentality. For a few, easy credit can be a life saver and can actually make you rich because you will not actually use your money but the bank's. Your money would be sitting safe in a fixed deposit while you still get a credit line which can even be used without paying any interest. One needs to be disciplined in order to avail credit line because repayment is really important and missing even a single day can dent our credit profit.

A few people still opt for credit to fulfil their luxuries. They would take a loan just to buy that expensive car so that they can show-off in front of their loved ones. These people are on the verge of becoming poor just because they have no proper planning.

[Fiatless]

It will depends on ones mentality. For a few, easy credit can be a life saver and can actually make you rich because you will not actually use your money but the bank's. Your money would be sitting safe in a fixed deposit while you still get a credit line which can even be used without paying any interest. One needs to be disciplined in order to avail credit line because repayment is really important and missing even a single day can dent our credit profit.

A few people still opt for credit to fulfil their luxuries. They would take a loan just to buy that expensive car so that they can show-off in front of their loved ones. These people are on the verge of becoming poor just because they have no proper planning.

Many big successful businesses take loans for several reasons.  It could be for capital,  expansion, or diversification. So it is not wrong for people to seek loans when they want to invest. Those who depend on loans to cover basic needs or satisfy their luxury desires might never come out of debt. They fail to recognise that loans have interest; this is why they should be used only for profitable ventures.