Debt is the finance term and it is very important in business . Because , every businessman needs money but his own sources of money are limited . So , for fulfilling the money in business for purchasing plants and machinery and other equipments , it is very necessary for businessman for getting Debt.
Simple definition of Debt
Debt is the liability of business . It is shown in the liability side of business . It includes loan , outstanding expenses and advance incomes . But basically , taking money or borrowing money on credit creates Debt . The persons who provides debt are creditors or money lenders . They gets interest on his given debt .
Explanation of Debt
After developing the technique of Trading on Equity , large Corporate are taking more and more debt and take benefit of difference between dividend rate and interest rate . Debt may be secured and unsecured . If any person gives debt on the basis on some security , then , it is called secured debt . In case of secured debt , creditors has power to sell the asset which is under security , if borrower does not pay his debt . Unsecured debt is that type of debt which is given without any security and if borrower becomes bankrupt , creditor can not get his amount by selling security . So , it is more risky than secured debt. So , creditor charges high rate on this type of debt .
We can also divide debt into consumer and productive category . If any body takes loan for consumption or purchasing any consumable product . Then this debt is called consumer debt . Credit card debt in USA is most famous type of consumer debt . College boys , small salaried person takes these debt in the form of personal loan .
( visionvictory has given many Options for people who are in credit card debt . see Video here )
Productive debt is the debt which is taken for fulfilling production projects . Enterprises takes this debt for buying business plant and machinery which will be benefited for increasing production .
Simple definition of Debt
Debt is the liability of business . It is shown in the liability side of business . It includes loan , outstanding expenses and advance incomes . But basically , taking money or borrowing money on credit creates Debt . The persons who provides debt are creditors or money lenders . They gets interest on his given debt .
Explanation of Debt
After developing the technique of Trading on Equity , large Corporate are taking more and more debt and take benefit of difference between dividend rate and interest rate . Debt may be secured and unsecured . If any person gives debt on the basis on some security , then , it is called secured debt . In case of secured debt , creditors has power to sell the asset which is under security , if borrower does not pay his debt . Unsecured debt is that type of debt which is given without any security and if borrower becomes bankrupt , creditor can not get his amount by selling security . So , it is more risky than secured debt. So , creditor charges high rate on this type of debt .
We can also divide debt into consumer and productive category . If any body takes loan for consumption or purchasing any consumable product . Then this debt is called consumer debt . Credit card debt in USA is most famous type of consumer debt . College boys , small salaried person takes these debt in the form of personal loan .
( visionvictory has given many Options for people who are in credit card debt . see Video here )
Productive debt is the debt which is taken for fulfilling production projects . Enterprises takes this debt for buying business plant and machinery which will be benefited for increasing production .
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