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This is an absolutely ordinary case – you are in a situation where you urgently need money. The reasons may differ. What, you don’t want to talk about it? Fair enough, only your bank’s manager must know the real reason for your visit. One way or another, you urgently need a cash loan. Because you can no longer live with your family in this tiny apartment. Or maybe because you got tired of living with this annoying vehicular hypochondria and it’s time to update your wheels.

At such moments, it seems to you that you are alone in the world with your problem. However, billions of people are familiar with this despair. We set up a little research and put together the main reasons why people usually take loans. Do you wonder how many of them you have had to deal with? You may still have to face a few of them in the future.


Yes, this is a frightening word. Perhaps the most common reason. The housing price varies in different countries, but it is an extremely expensive acquisition almost everywhere. A very little number of people can afford it without contacting the bank. Take a look at the stats: 78% of households in 2018 in the United States were purchased in a mortgage. Only 22% of residents acquired a house without loaning the money. However, the vast majority of them, most likely, either engaged in resale or received an inheritance. The truth is buying a home is a very serious and expensive step, but it is often necessary.

Besides the fact that this is the most common reason for lending money, it is also the main factor that drives people into debt. The sum of the mortgage holders’ total debt has been growing for the 18th quarter in a row and in the first quarter of 2019, it exceeded $15 trillion. Absolutely incredible numbers. And although analysts admit that the growth rates aren’t yet as terrible as in 2008, the overall dynamics are still depressing.

Auto loans

Having a vehicle allows you to enjoy a comfortable movement that public transport doesn’t always have to offer. It could be a simple car, trailers, motorcycles, and so on. However, who walk the streets with tens of thousands of dollars in their pockets? Most often, a new car is a fairly expensive purchase, so consumers turn to the bank and ask for an auto loan. Fortunately, financial institutions meet customers’ needs and offer the lowest interest rates. And do not forget about insurance – you will have to take care of that issue. 

Debt consolidation

Another common reason why people take loans. Imagine that you have a mortgage or a lot of credit cards with bad balance, and so on. Because of this, you have to drain money for nothing and pay high interest for delays. Besides, it is very inconvenient to monitor numerous monthly payments. 

In such a situation it would be a reasonable decision to take a loan to consolidate all your debts. Thus, you combine all your credit accounts and debts into one single monthly payment. 

However, it is better not to rush with this decision. All numbers and percentages need a good count. We highly recommend contacting an experienced analyst who will tell you where is the right way. 

Experiences (Dream vacation, traveling)

It may seem to you that your ordinary vacation isn’t such an expensive pleasure. On the other hand, a honeymoon or a luxury cruise is a completely different thing, isn’t it? Dream vacation – everyone has their own understanding of what it is. 

At first glance, you might think that this is nonsense to borrow money for a vacation, but this is quite a common reason. For example, the total amount that Americans loaned and spent on their vacations exceeded $12.5 billion in 2018. Incredible, right? 

Business start-up

There is a huge number of options to get a loan for your start-up. Today, banks offer a wide range of financial assistance, from small budgets for a short period to bulk financing. Many of them, however, are guided by such indicators as the business owner’s personal credit score and his current experience. For example, one of the most common conditions for issuing a loan is that your company must be in business for at least a year. This restriction is done in order to warn financial institutions against entrusted startups won’t be able to return the borrowed money.

However, you shouldn’t count on serious money. Usually, the banks are ready to provide your business with the amounts up to $150,000. If you are in need of more extensive financing, then you should look for private investors.

Inherited debt

Yes, for the most part, the personal debt of a deceased person is considered a loss to the bank and nothing can be done about it. Nevertheless, there are cases when the deceased person’s debt passes onto the shoulders of his family and relatives. If you have connected yourself with any financial responsibilities with your deceased relative, then you wouldn’t be able to get away from his debt. In such situations, people often take a loan in order to deal with a sudden debt and to cover the interest.

Wrong financial planning

One of the most common causes. Many people do not know how to conduct their financial affairs properly and distribute their budget (salary, utility bills, debts, etc). That’s why it often happens that it is still half a month until a payday but you have already run out of money. In this case, people can apply to the bank for a small personal loan (Early Salary). This service is extremely popular in Europe, Asia and even in the United States. The amounts are usually not large and aren’t subject to high taxes. 

A few conclusions

In fact, there are many situations in which you may need to take a loan. Our article lists the most basic ones. We didn’t mention such situations as loans for purchases that are not affordable (beyond your means) or loans for education, shopping and entertainment (e.g. concert tickets). Don’t forget about the holidays (Christmas, Birthday), when the planned spending turned out to be higher than expected.

The fact is that loans are a common situation for the average person today. You shouldn’t treat this as something bad. It won’t spoil your status and your reputation. You don’t need to be afraid of that. What you need is to learn how to plan your expenses and incomes correctly and distribute your personal or family budget competently.