Debts are easy to borrow but debt repayment is not a simple thing
. Debtors are needed to repay the amount with fixed interest.
Good debt
Debts which are taken for purchasing home or for schooling are considered as good debts. It is a smart move to take debts for schooling or owning home as one can make more money after completing education etc. Moreover, investments on home and education increase in value with times and financial health gets improved.
Ugly debt
Debts which come with huge interest rates are considered as ugly debts. Pay day loans come under this category of debts. If someone owns a television set or any other household good with this kind of loan then he has to pay more interest as compared to goods owned through credit card payment. Sometimes, the interest rate of this loan touches 25 % to 100 %.
Worst debt
Worst loans are loans which are taken during crucial financial condition. One enters into the pitfall of worst debt to avoid harsh running financial situation. This kind of debts offered by creditors is considered as predatory lending practice.
Bad debt
Credit cards are regarded as the fastest way to be fallen into debt. Most of individuals move for this type of debt. Bad debt usually represents the money lost by any business. Creditors become unable to get repayment in this case and thus the debtor is regarded as a bankrupt.
Once an individual is declared as a bankrupt, then in that case the debtor is asked to pay more than the debt itself. Thus, one needs to understand all these debts thoroughly before borrowing money from the creditor.