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A man from Kenya who makes 50,000 KSh each month is seeking guidance on whether he should consider taking out a loan to purchase a vehicle.
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A 28-year-old man based in Nairobi mentioned feeling pressured to meet the expectations of his new girlfriend, who desires some form of sophistication.
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The personal finance expert Eric Muchoki cautioned him about taking out a loan to buy a vehicle, labeling such an action as a liability.
A unnamed Kenyan individual penned:
I’ve recently started a new job which boosted my monthly income from KSh 32,000 to KSh 50,000. Currently, I reside in a bedsitter with a rental fee of KSh 8,500 per month. My additional expenditures consist of: groceries (KSh 5,000), personal purchases (KSh 5,000), supporting my parents (KSh 3,000), and maintaining a relationship with my new girlfriend (KSh 8,000). Each month, I set aside KSh 5,000 for savings, aiming eventually to purchase a vehicle. Yet, multiple times, she has urged me to borrow money so we can get a car sooner. Her rationale is that all her friends’ partners own cars. Should I consider this risky move? Furthermore, she warned that our relationship might be over unless I agree. Now, I find myself at an impasse. Could you provide some guidance on what steps I should take next?
Eric Muchoki, a personal finance expert and director at Customized Solutions Insurance Agency, offered valuable insights on what the man should do.
Why you should steer clear of loans
Muchoki, who specializes in personal finance, cautioned the man against taking out loans to purchase a vehicle.
He pointed out that the 28-year-old might find it difficult to repay the loan without an additional source of income.
Therefore, he suggested that he begin a entrepreneurial venture instead, with the plan to use his earnings later on for purchasing a vehicle.
“Taking out a loan makes sense only if it’s intended for business purposes, as this can create revenue streams sufficient enough to cover repayment of the loan,” Muchoki explained to .co.ke.
Warning: The recommendations provided in this article are of a general nature and do not aim to sway readers’ decisions regarding handling financial difficulties. Readers should seek personalized professional advice before reaching any financial conclusions related to their specific circumstances.
Have a tale to share? Seeking professional guidance? Send your questions to [email protected], placing ‘Seeking Expert Advice’ as the subject heading.
What is the importance of having an emergency fund?
As reported elsewhere, a Kenyan man earning over KSh 70,000 monthly sought advice on boosting his wealth by launching a venture in the digital ride-hailing sector.
The man disclosed that he has a family and that his monthly expenses total KSh 40,000. He also revealed that he has been making payments on a motorcycle loan and is on the verge of paying it off.
Muchoki told
.co.ke t
hat the man should first establish an emergency fund.
Broke man seeks advice
Elsewhere, a 36-year-old Kenyan lady, earning a net salary of KSh 55,000 a month, asked for help managing her spending.
The woman explained that her expenses outweigh her income, which forces her to rely on loans to get by.
Muchoki suggested that she advance her education to improve her profession and increase her chances of a salary raise.
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