When People Take Out A Loan To Buy A House Is It Usually An Unsecured Loan If Not What Do They

Can I use a personal loan to buy a house? The house costs 25k, and I will pay 15k in cash and get a 10k personal loan to pay the rest. Is this a good or bad idea?

Don't make such an important decision based on people's half baked opinions on Quora. You have to answer this question yourself. As with any investment, you need to be comfortable with the most likely outcome, and a certain degree of worse outcomes that makes up your risk tolerance.What you should do is take the numbers that you left out like your income, your interest rate, Any future plans and expenses such as marriage or children that may affect these things, and calculate how long it will take you to pay off the loan if everything goes according to plan. Say the answer is X years. Then see how much money you'll have leftover to spend each month and see if you're OK with that lifestyle for the next X years.Then, assume a few worst case scenarios like you have kids and they are expensive, or you or someone in your family gets cancer and you have to pay $10,000 a session for chemotherapy. Or your interest rate goes up (assuming it is a variable rate loan). And calculate both the likelihood of each outcome and whether you can survive the hit. Then, ask yourself if you’re personally comfortable with the amount of risk you're taking. Everybody's risk tolerance is different, and it also depends on your life situation. For example, you may be more risk averse when you are married with children than when you are young, healthy, and single.Only you can answer these questions. Don't listen to people on Quora who don't know your situation. Especially Bankers and Investments Advisors who are trying to sell you things, or people who are not familiar with your tolerance for risk. Follow your gut. If your gut says that you will be uncomfortable with this loan, don't take it. The purpose of money is to make us feel safe and secure.

Why don't people take out loans from the bank to put in index funds?

People don’t like making investments that involve negative cash flow. Over the short term the bank interest would need to be paid. The investor would need to either:Continue to borrow more money (allow the loan balance to rise, as interest accrues), orPeriodically liquidate part of the investment, orPeriodically add more fundsMost small investors are not looking for an investment with those attributes.On the other hand, you can if you want. You can open a margin account with a broker, and buy SPY or some other index ETF and finance 50% of your investmentment.Just remember, as Keynes is reported to have said: The market can stay irrational longer than you can stay solvent. If the index drops by a large amount, the brokerage (the lender) could decide to liquidate your position, pay off the loan, and return to you a small fraction of the capital you originally deposited.

Why do people take personal loans in India?

I think one of the primary reasons is due to the rapid transformation in the lifestyles of Indians. Another reason behind the rising trend in personal loans is the ease of availability without any firing of typical questions from lenders. These loans are unsecured ones, people take it for diverse reasons like-medical exigency, to clear credit card bills, to pay children’s school fees, etc. Some people consider and take these short term personal loans- as a convenient way to enjoy quality time with their family. And, yeah, in this whole process there is no need to hurt or break your current savings.Now, because of its versatility, and simple eligibility criteria, it has become a more valuable financial product in one’s arsenal. All you need to do is download the lender’s app, fill in your information, check your credit score and apply for a personal loan. Well, I think some of the more common reasons why people in India, opt for personal loans are-To Renovate Home: Home is where the heart is-and investing in home décor becomes important. So getting a personal loan subject to favorable terms and conditions is one of the easiest ways one can remodel his or her home. There are so many lenders who offer loans at an appealing interest rate.Long-Awaited Family Trip: - I think the breakneck speed of our daily lives, in today’s time, makes one imperative to go on the annual family vacation. Hence, short-term personal loan acts as a convenient way to enjoy some quality some-time with your family.Medical Emergency: - We all know that life is a roller-coaster ride, a medical emergency can sneak-in when you least expect them. However, there are multiple lenders in the financial market who offers personal loan at attractive interest rates, which fits for such kind of an obligation. A personal loan can really help to meet an unforeseen medical expense, unplanned expenditure, and any other routine care.Hence, easy approval and quick disbursal of personal loans are the add-ons that help to tackle any unforeseen obligations. In addition to this, personal loan interest rates are comparatively lower than credit card interest rates; thus people choose personal loans more in India.