HOW TO AVOID BAD DEBT
BAD DEBT refers to overdue payments that raise doubts about the borrower's ability to repay the loan and the lender's ability to recover the funds. This is one of the main reasons why many borrowers feel hesitant and cautious when taking out loans.
Let’s explore with PTF some ways to avoid bad debt when borrowing money:
- Evaluate the loan amount and repayment ability before signing – Before putting pen to paper, borrowers should carefully review the terms, conditions, loan amount, and monthly repayment obligations.
- Keep loan/credit expenses below 50% of monthly income – Ensure that you have the financial capacity to make timely payments in the coming months.
- Avoid borrowing from multiple sources or taking new loans to repay old ones – This "snowballing debt" strategy carries significant risks and can severely impact your financial situation.
- Control spending and set payment reminders – Missing payment deadlines can result in extra interest and penalty fees, so borrowers should set reminders to stay on track.
Ultimately, no one wants to be listed as a bad debtor by CIC, so be cautious and responsible when taking out loans!
