Understanding the difference good debt with bad debt
A borrower (debtor) who either is a debtor who knows the difference good debt with bad debts. Good debt is debt that is affordable installment and the installment is paid by others, whereas bad debt is debt that is not affordable installment and paid from the assets of the owner. Good debt is used for productive purposes that bring in revenue, while bad debt is debt that is used for consumptive purposes that do not generate income or revenue.
Good debt is debt that is affordable installment because of the installment is only a fraction of our income or typically less than a third of our income. Greater accuracy in determining the installments will determine fluency in pay or pay off the loan. The lender will usually ask for income information owned by prospective borrowers who apply for a loan in order to determine the exact number of installments. Determination of the appropriate loan installments will not interfere with the assets we have.
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