What are the advantages of debt?

by Diana S. web designer

Borrowing is a good choice when considering making an investment that improves your quality of life. Remember, getting this type of financial commitment can be rewarding if you are responsible and don't owe more than necessary.

That's why before making a decision, ask yourself, do I need it? If after analyzing the answer is yes, then pay attention to the following factors:

  • Payment capacity

  • Contract terms and conditions

  • Interest rate

  • payment method

  • loan capacity

Click here to learn Credit 9 and how you can calculate your loan capacity.

Evaluating the type of debt

Debt as an investment or necessity: it is natural to raise capital with it to purchase goods or services that increase in value over time, generate income, or are essential to your life. Example: house (increase in value) or washing machine (needed for housework).

Unnecessary debt: in this case, we refer to a loan to buy goods or services that are not needed when the debt exceeds the ability to pay or when the debt is acquired to cover something else.

Profit from debt

  • Credit history: Having a good credit history is a good cover letter that will help you receive a positive response when applying for a loan or service.

  • Allows you to invest or take advantage of opportunities: Loans will enable you to invest in goods or services that can generate income over time.

  • Improve your quality of life: everyone has different needs, while for someone a motorbike can mean a luxury, for others it may be the only viable transportation possibility, therefore, borrow responsibly when your quality of life can improve and not there is a time saving is a good and wise decision.

  • It allows you to manage your cash flow: Acquiring debt will enable you to pay off the money you need right now in several future instalments.

  • It could be the start of a business life: Well-managed debt can help you get started with the entrepreneurial project you desperately want. This capital will help you get started in the first few months of your business.

  • Emergency assistance: Loans in times of crisis can give you a better way out of the situation you or your family are in.

It's about the accumulated debt that cannot be paid with one's salary when contracting it. This is a serious problem that, apart from impacting income, can lead to increased stress, family fights, and even severe health effects.

Before going deeper into the causes of excess debt, remember that loan demand, a situation that creates debt, is not inherently harmful because, if handled properly, it can help improve people's quality of life and welfare. Help them buy goods and services that cannot be paid for all at once.

However, there are several behaviours of bank customers that cause debt problems, in addition to unexpected causes that affect the payment of financial commitments. Remember, the problem is not that the credit is wrong; the problem is to adequately analyze what we are borrowing for and that the fees and interest we have to pay are broadly compensated for the benefits we get with the goods or services we get.

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About Diana S. Advanced   web designer

40 connections, 3 recommendations, 142 honor points.
Joined APSense since, April 17th, 2020, From Malang, Indonesia.

Created on Oct 25th 2022 23:45. Viewed 130 times.


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