Should Christians Borrow Money for a Loan? 5 Things to Consider
August 16, 2024
Borrowing money seems like a fact of life in our culture, unavoidable. The Bible does not prohibit borrowing. However, it has strong words of caution.
“The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7).
And there’s this: “God paid a high price for you, don’t be enslaved to the world” (1 Corinthians 7:23, NLT).
Financially speaking, a common way people end up feeling enslaved is by taking on too much debt. In that situation, it can seem impossible to give generously, save or invest adequately, or enjoy financial margin—a wonderful bit of breathing space between your income and expenses.
If you’re thinking about borrowing money, here are five questions to consider.
1. What are my reasons?
Patience is not a value that gets much promotion in our culture. We live in a hurry up, get it done world. And sometimes marketers do us no favors here. “Buy now,” they suggest. “Easy financing available.”
So, ask yourself, are you in too much of a hurry to buy what you want with borrowed money? Could God be encouraging you to slow down?
2. Are there other options?
By slowing down a bit, you may discover that God has something better in store for you. Maybe he wants to give you what you’re eager to buy. Maybe your desire for it will decrease or even disappear if you give it more time. Hurried decisions often end up being bad decisions. By pressing the pause button, you may discover alternatives that cost less. Or, by taking your time, you may be able to pay cash for what you want.
3. What are the dangers?
It is very easy to get into debt, and it can be very difficult to get out. Car salespeople routinely ask prospective buyers how much of a monthly payment they have in mind. In order to make the numbers work, they might offer an exceptionally long loan. While that may keep your monthly payment seemly “manageable,” it also means that you’ll pay more in interest over the life of the loan.
Also, consider this: A credit card balance of three thousand dollars might not seem like a lot. However, even if you stop using your card to charge more, if you make the minimum monthly payments, you’ll pay a steep price for that debt. In fact, it could take more than ten years to pay off that debt, and you could end up spending over five thousand dollars.
4. How much is too much?
If you’re intent on borrowing, make sure you can handle the payment without disrupting other priorities, such as giving, saving, and investing. When it comes to buying a house, for example, it’s generally best to keep the cost of your mortgage, property taxes, and homeowner’s insurance to no more than twenty-five percent of your monthly gross income—preferably no more than twenty percent.
For most households, that’s the threshold that still allows for living generously and saving and investing for future goals. And that assumes you have no other debt.
In some especially high-cost-of-living areas, you may have to devote thirty percent of monthly gross income to housing, but of course, that means spending less in other categories.
5. Will I keep my word?
Borrowing money comes with a promise to repay. As a Christian, it’s essential to keep your promise. It’s simply proper behavior and a good witness. And, as the Bible teaches, the opposite is true.
“The wicked borrow and do not repay, but the righteous give generously” (Psalm 37:21). So, when borrowing, be as certain as possible that you have the wherewithal to repay the money. Again, the Bible does not prohibit borrowing, but it encourages a cautious approach. So, when considering a loan, take into account the five considerations above.
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Matt Bell is the author of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.
