And do not get me wrong, I honestly do not consider debt as something bad, but it is important to know how to use it to our advantage, so today we will talk about how to have a healthy relationship with debt, whether you manage it as an individual or you are looking for a corporate debt to grow your company. With a healthy debt, I mean incurring only a debt that you can pay, since keep in mind that you will not only ask for a certain amount, but whoever lends you that money will charge you an interest rate for the loan.
Let’s start with those people who want to borrow as a natural person, whether it is a personal loan or to buy a car or even real estate, in this case take into account how urgent it is to have that good or service, or if it is necessary or not acquire it; It is also important to know if you have the possibility of saving and investing the money and later making the purchase or if you can acquire it through credit, such would be the case of a house, very few people can pay “cash” for a house or a department, which is why the majority resort to a mortgage loan.
Once you have decided if the credit is necessary, I suggest you take into account the following: the amount requested, evaluate if you need a loan for the total amount of your purchase or if it is possible that it is only a percentage, quote in two or three institutions so you can compare terms and interest rates. Take into account that there are credits at variable rates and fixed rates, ask what is best for you, also analyze before requesting a loan if you have other open credits, how much do you need to pay them off and what percentage of your income does your total expenses represent to see if You will be able to face all the payments, since you have to keep in mind that if you miss a payment, they will charge you default interest and the debt could get bigger.
Now, if you are a company, regardless of size, a reasonable debt can be of great help, either to start or grow your business, but in this case, in addition to taking into account the amount, term, rate, compare the different credits that you could obtain, it is also important to take into account the “core” of your company, that is, what you produce, if the payment is immediate or you also give credit, what are you going to use the credit for and for how much time you could start to have benefits on the asset you bought; For example, if you are going to modernize a line, how long will it take you to start up the line?
Likewise, it would be opportune to analyze if you will incur a debt in your local currency or in foreign currency, the advantages and disadvantages that this could cause you. It is worth mentioning that depending on where you operate geographically, the industry to which you belong, among other circumstances, a loan could have a higher or lower rate, since there are industries that are riskier or have longer processes, so The banks know that it could take more time to generate a flow that helps or solves the credit payments.
It also seems relevant to me to tell you that as a legal entity you can borrow in different ways, it could be through a bank loan, requesting the help of your shareholders or you could issue bonds, to give some examples; In all cases, you must evaluate who lends you at a lower rate, that is, which debt is cheaper.