A person uses a calculator to decide if they can take on more debt.

When It’s Okay To Take On More Debt

While you might have thought differently, not all debt is bad. Contrary to popular belief, there is good debt and bad debt. Wondering which is which? This article will teach you all you need to know about debt tips, including when it’s ok to take on more.

When It Makes Sense To Go Further Into Debt

1. For A Mortgage 

If you can pay for your home in full off the bat, more power to you. Unfortunately, this is simply impossible for most Americans – sometimes, just getting the down payment together is a challenge.

According to the US Census Bureau, more than two-thirds of American homeowners have a mortgage. This is considered good debt if it provides the principle needed to buy your first property. Of course, your monthly mortgage payment should fit within your means, as you want to make sure you have enough money to pay for your home and any expenses that come along with it.

Over time, most homes will appreciate, adding to your equity and assets.

2. For A Car

You won’t be able to get to work, buy groceries, or even pick up your children from school in most towns without a car. If your main vehicle suddenly kicks the bucket or you move somewhere far from public transportation, a car becomes a necessity you cannot live without.

In this case, taking on a vehicle loan may be the only option. About one-third of Americans have a car loan on their primary vehicle.

These debt tips don’t mean you should buy a brand-new, expensive vehicle. Cars depreciate the moment you step off the lot, so find your balance by purchasing a used car over a new one. And, while it should go without saying, be sure to stay away from car leases entirely unless you want to throw your money away.

3. When It Helps You Make Money

Many entrepreneurs take out loans to get a business up and running. Start-up funds are essential for new companies and ideas, and only some have the savings to fund them on their own.

If your new debt is fueling an idea with the potential to make you a lot more money, it could be good debt; however, your idea should be backed by research, second opinions, and a strong business plan. Be sure to dot all your Is and cross your Ts on this one.

 A black couple calculates their finances together.

4. When It’s Calculated

In many other instances, people take on more debt as a calculated move to save money elsewhere. Out of all our debt tips, this one requires you to be very disciplined and thorough.

One example would be completing a cash-out refinance on a property and using that cash to pay down high-interest debt. This would mean you were losing money by refinancing to a larger mortgage, but with that money, you could save thousands on interest for the loan you paid off.

This option will only work if you have the numbers and math to prove it, so be sure you can defend your stance before taking on more debt to save elsewhere.

5. For Emergency Expenses

Often, life throws us a curveball – an expensive one, at that – that ignores debt tips and frazzles our finances. Natural disasters could wreak havoc on your home, your son could crash your car, or your family could receive a medical diagnosis you never expected.

These emergency expenses need to be dealt with immediately, and sometimes taking on debt is the best way to do so. Many loan options, such as an emergency installment loan, were created for this purpose.

When To Get An Installment Loan

An installment loan can be used as good debt to handle emergency expenses. Here at New Mexico Title Loans, Inc., you can get approved for up to $1,250 to address your urgent expenses.

To qualify, you’ll need a driver's license or state-issued photo ID, proof of income through your latest pay stub, and proof of an open checking account under your name. We do not require collateral to apply.

First, fill out our online form, and a representative will call to discuss the loan with you and answer any questions. Afterward, you can head to your nearest location, and once there, a loan representative will examine your documents to determine if you qualify for approval. Best of all, we have plenty of locations across New Mexico that can assist you.

If approved, you could have the installment loan amount in your account on the same day or the following business day.

A white couple reviews their finances and smile.

The Importance of Debt

Now that our debt tips have taught you which debt is powerful and which debt leaves you powerless, you understand the importance of taking on more debt if it's necessary.

If you’re facing financial emergencies, you can leverage the debt of an installment loan to eliminate urgent bills. To learn more about this possibility and see if it’s the right choice for you, reach out to us today.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

June Mckaig

June Mckaig writes articles on finance and budgeting, hoping to provide insight amidst the overwhelming crowds of information on the internet. She feels that with all this accessibility comes a lot of false data, and she would like to contribute astute, helpful input that she knows can help others. If you would like to learn more about June's research, read more here.

New Mexico Title Loans

If you are searching for a convenient way to get a title loan, look no further than New Mexico Title Loans, Inc. We offer online title loans where not store visit is required or in-store title loans and installment loans. To get started, fill out the simple online form above or give us a call at any one of our convenient store locations.

All you need is the following items:

  • Driver’s License or State Issued I.D.
  • Lien-Free Title to Your Vehicle
  • Your Vehicle for Inspection

When you’re ready to get the emergency cash you need without all the hassles of a traditional loan, New Mexico Title Loans, Inc. has you covered with a car title loan up to $10,000 today.

New Mexico Title Loans