what should you not use a loan to purchase everfi

2 min read 10-03-2025

what should you not use a loan to purchase everfi

Many of us face financial challenges that require borrowing money. However, understanding when and what not to borrow for is crucial to avoid a debt spiral. This article will focus on why you should never use a loan to purchase Everfi courses or similar educational products, and outline other high-risk purchases best avoided with borrowed money.

Understanding the Risks of Loaning for Everfi

Everfi, while providing valuable financial literacy and other educational programs, is not an investment that warrants debt. Here's why:

1. High Cost vs. Return on Investment (ROI):

Limited Resale Value: Unlike assets like a home or car, Everfi courses typically have no resale value. Once purchased, their value is consumed through use.
Uncertain Career Impact: While Everfi can enhance skills, its direct impact on salary or career advancement is not guaranteed. The cost of the loan may outweigh any potential future earnings increase.
Alternative Funding Options: Explore free or lower-cost educational resources before considering a loan. Many free online courses offer similar content.

2. The Debt Trap of Small Loans:

Small loans, often used for educational programs, can be deceptively dangerous. The interest rates might be high, leading to significant debt accumulation over time. This high interest quickly surpasses the initial cost of the program itself, causing long-term financial strain.

3. Impact on Credit Score:

Taking out a loan, especially if you're already struggling financially, negatively impacts your credit score if you default or struggle to make payments. A poor credit score can significantly affect future borrowing opportunities, like mortgages or car loans.

Other Purchases to Avoid With Loans

While Everfi represents a specific example, the principles extend to other purchases. These high-risk areas should never rely on borrowed money:

Luxury Goods: Items like designer clothes, jewelry, or expensive electronics rarely appreciate in value. The loan repayment will far exceed their depreciating worth.
Non-Essential Upgrades: Avoid loans for home renovations or car upgrades unless they add substantial value and are necessary, not just desired.
Speculative Investments: Investing borrowed money in the stock market or other high-risk ventures is exceptionally unwise. Losses can lead to a crushing debt burden.
Consolidation Loans (used improperly): While helpful for managing multiple debts, consolidation loans can be detrimental if not used to reduce overall interest rates and improve repayment terms.

Responsible Borrowing Practices

If you must borrow, adhere to these guidelines:

Understand the terms: Carefully review interest rates, fees, and repayment schedules before signing any loan agreement.
Create a budget: Ensure your monthly income comfortably covers loan repayments without compromising your essential expenses.
Explore alternatives: Exhaust all free or low-cost options before resorting to debt.
Prioritize needs over wants: Focus loans on essential purchases that improve your financial stability or long-term career prospects, rather than frivolous spending.

Using a loan for Everfi or similar educational products is generally a poor financial decision due to its lack of return on investment and high risk of accruing substantial debt. Always prioritize responsible borrowing practices to avoid long-term financial hardship. Remember, seeking advice from a financial advisor can be immensely helpful before taking on any debt.