Debt is a common term in business and finance as starting up a new organization and running it without getting debt is really a tough thing and hard to even dream of it. There are various options to borrow money for business and repaying back is most important and let us continue reading about the types of debts and a brief description of it.
Debts are categorized into two types.
- Good debts
- Bad debts
Good debts are the debts which can be returned for sure. It includes educational loans, housing loans, business loans and much more.
In an educational loan, almost all of us will repay the amount we buy for pursuing studies and so it is considered a good debt. The interest rate for educational loans is usually lesser than the other loans and so the ones who go for debts are able to repay it back without any stress. Still, it is a burden for the students because they are unable to concentrate on their educations and they think about the repayment of loans often.
The government should take some actions to start activating zero percent interest scheme for educational loans and it will positively create an immense impact and n number of students get benefit in this scheme.
Business loans as they sound, it is given for beginning a business and it is applicable to only those people who have a great background credit history and credit score. Not everyone who wishes to get loans can avail it. The business loans should be repaid at the correct time either the company gets profits or loss. The lender does not bother about the incomes and the expenses for the landlords.
The bad debts are the debts which have the chances of returning little amount or there is no chances of any amount of returns. It all depends on the borrower but if the borrower fails to repay the debt amount, then the lenders are supposed to take serious legal against them to get back their funds.
It is the responsibility of the buyer to settle the money back to the giver. If we have a dilemma that whether we are fit to repay or not, then better never go for any debts.
Hence concluding the topic saying that the debts either it may be good or bad, it is always a huge burden for the people and causes serious psychological illnesses.