Before taking a payday loan, of course you have consideration. Some may consider the method of payment, the type of interest or other considerations. Marty Guererro will dissect 6 considerations before taking out a loan.
There are several reasons people take debt, from productive debt (good debt) to unproductive debt (bad debt). There are several versions which state that productive debt (good debt) and unproductive debt (bad debt). What do you think is meant by productive debt (good debt)? Are mortgage loans including good debt? Now for some people mortgage loans are good debt, but mortgage loans can be a thing that is not right for some people (of course in certain financial conditions).
A financial consultant in America named Robert T. Kiyosaki has opinions about productive debt (good debt) and unproductive debt (bad debt).
According to Robert T. Kiyosaki, all debts paid by others are good debt. So if the mortgage loan is paid by someone else (for example buying a property on a mortgage then leased to a warehouse) then the mortgage loan is a good debt.
The following is a general illustration of good debt and bad debt.
Disclamer: the illustration above is not 100% right for your financial condition. If you want to make a decision to take a loan or not, you should discuss it with a bank person, people who understand debt management or an independent financial planner.
This second consideration is the thing that most forgets when deciding to take debt or not. The source of debt repayment is a dizzying thing when someone has to pay the principal and debt interest.
The solution is to think carefully about how I will pay the principal and debt interest. If from active income, keep in mind whether you already have installments or not. It’s not funny if your active income is IDR 10,000,000 per month and you have to pay debt and credit cards in the amount of IDR 8,000,000 per month. Try to get a maximum of 30% of your active income and credit card debt payments. So if the monthly income is IDR 10,000,000 per month, the maximum installment should be IDR 3,000,000 per month.
There are several types of debt distribution or debt characteristics, including:
Based on the payment: repayment at once (single payment) and installments (installment). An example of a debt that is generally repaid at once is a small amount of debt (<Rp. 500,000) to a friend. Examples of programs of debt paid by installment (installment) is a vehicle debt, mortgage debt, accounts payable and others.
Under the Guarantee: secured loans and unsecured loans. Examples of debt with guaranteed collateral are trade payables at banks, which are generally guaranteed by ownership certificates for houses. Examples of unsecured debt are KTA – Unsecured Loans.
Based on interest, debt is divided into 3 types, namely variable rate debt ( effective rate ), fixed rate interest (flat rate) and annuity interest. The following is an example of a calculation of the three types of debt:
Calculation with fix interest
Effective interest calculation
Calculation with interest annuity
Based on the Fall of Time debt can be divided into short term ( shot term loan ) and long term loan. Short-term debt usually has a maturity of less than 1 year, for example credit card debt. Long-term debt is debt that has a maturity of more than 1 year, for example home ownership debt.
Debt can come from many sources. Before taking out a loan, make sure the loan costs (aka interest and administrative fees) are the cheapest. An example for funding a business is cheaper to use interest on debt compared to credit card debt.
The following are sources of debt when you are taking a loan:
The next consideration when we will take a loan is collateral. Collateral or Collateral in English is a guarantee in general a real asset whose value is at least equal to the amount of your loan. Example If your loan is Rp. 100,000,000, at least your collateral is greater than or equal to Rp. 100,000,000.
The form of collateral is adjusted to the source of debt, for example when using debt from a bank, collateral in the form of a house certificate is a choice of collateral that has a high ceiling. Another story when we take loans in cooperatives or at pawnshops.
There are risks that we face when taking out loans, namely the risk of the death of the owner of the debt and the decline in the value of the asset or collateral. Let’s discuss these two main risks.
The first risk is the death of the debt owner. Ever heard of a story of a child who was given a debt inheritance? Now that is one of the risks of taking a loan. When the debt owner has a critical illness or dies, the debt becomes a burden on others who do not owe. The solution in this case can be solved with life insurance, emergency funds and the right inheritance strategy.
The second risk is a decrease in assets. This happened in America, during the subprime mortgage crisis. The illustration is that Mr. XYZ bought a house with a mortgage system with a DP of Rp 50,000,000 and a total debt of Rp 450,000,000. When Mr. XYZ’s house was offered in the market, it turned out that the price of the house was only Rp. 250,000,000 (due to a crisis).
If you have experience with debt or things that you pay attention to before taking out a loan, please share it in the comments box. thanks.