If you have saved enough funds, then borrowing money to go for that much awaited vacation to your dream destination or indulging yourself in some luxurious shopping may not be such a bad idea after all.
Borrowing may not be a bad choice as long as it is done smartly. Do not opt for any personal loan in these kind of purposes. To understand this concept, it is important to understand the division of loans. Loans fall under two broad categories: secured loans and unsecured loans.
While secured loans are issued against collateral, unsecured loans are a contractual obligation between the borrower and the bank. While secured loans may lead to loss of collateral on failure to repay the loan amount, the interest rates on unsecured loans can be on the steeper side.
It is also important to refrain from taking travel loans, using credit cards to borrow travel expenses and borrowing from private money lenders due to the high rates of interest charged by them.