The Money Engineer
In April 2015 I took out a huge salary loan from one of the commercial banks. To qualify for the loan my account was upgraded to prestige. This upgrade cost me an additional 70k per month in bank charges.
This new account also qualified me to get a “free credit card” which I was more than glad to receive. Each time I was broke I would withdraw cash from the ATM using the credit card. A heavy penalty was levied each time I did this. This credit card landed me in a lot of trouble. I drew over 10m on this card and was paying over 30% in interest.
The interest rate on the bank loan was fixed at 19.5% but I ended up paying over 30% in loan repayments by the time I cleared the loan. When the loan was about to be cleared I was told that I qualified for a FREE top up! This time I was a bit wiser and politely declined the offer.
Eventually I repaid all these loans and I am debt free. I also closed that account and the credit card and opened a cheaper salary account in another bank.
Loans are not free money. They have big strings (or ropes) attached. Don’t borrow if you are not clear what you are going to use the money for. Before you borrow make sure you have done your ground work and research. The project you invest in should be able to repay the loan on its own.
Don’t borrow to start a business. Instead borrow if you must to expand an already existing business which has been tried and tested. When you borrow for a specific reason don’t divert the money to buy other things. Only borrow to buy assets or investments. Never borrow to buy consumer products like furniture, TV, cars, vacations, etc. Whenever you borrow money you effectively become an employee or a slave who works hard to make the bank rich!
If possible simply stay away from loans completely. Also carefully review your bank statements to detect any anomalies and crazy bank charges. Your bank maybe ripping you off afterall!