The majority of people's perception of debt is they are all bad no matter what form they are, whether a student loan or credit card. But did you know that loans can be classified into two types? Ask your debt consultant about the good debt and the bad debt. This article will answer your basic questions about good loans.
- What is a good debt?
Good debt is the money you owe, helping you increase your net worth and income over time. It also increases your net worth in the future. Most good debts have a lower interest rate.
2. What are the examples of good debt?
Your debt consultancy may once have offered you good debts. Good debts are mortgages, student loans, and business loans.
3. What's the difference between good debt and bad debt?
Good debts bring you income and increase your net worth in the future. On the other hand, bad debts do not benefit the person's financial situation in the future. You use these debts to pay for things that do not give you a return on investments.
4. Can a good debt turn into bad debt?
Good debt can turn into bad debt if it starts to pile up. Your loans become unpayable if they go beyond your income.
5. Is there a grey area between good debt and bad debt?
Medical loans are neither good debt nor bad debt. Loan consolidation in Singapore or the money you pay for your existing loans and liabilities can be beneficial, too, especially if you pay it off on time.
Where can you get a good debt?
You can get good debt from financial institutions like banks and money lenders. You can also borrow money from your family and friends.
Debts, good and bad, can be stressful if they start spiralling and become uncontrollable. Make sure to borrow the amount of money you can pay.
Learn more about debts at Debt Aid. Visit Debt Aid today.
