| Short term loans

Bad Types Of Debt

We all have debt in our lives. It is something that is part of life for most people. However, for some, debt really influences their everyday functions. That is because there is good and bad debt. We take a look at bad types of debt.

So What Are Bad Types Of Debt?opens in new window

Bad debts are those that drain your money, are not manageable and do not give any possible chance in the future of ‘paying for yourself. They are also likely to have no realistic repayment plans and are often run up when individuals make impulsive purchases of products they don’t really need or borrow cash to pay daily bills. It’s certainly bad debt if you can’t afford to borrow the money (for instance, you aren’t sure you’ll be able to meet the monthly repayments).

Examples of bad debt

Here are some examples of tdebts that you should look to avoid at all costs. A basic rule to follow is that if you struggle ot pay off a debt, and its interest costs are affecting your quality of life, then it is most definitely a debt you should never have taken on. Excusing obvious long-term debts such as a mortgage or to pay for a motor vehicle, debts should be short-term in general. 


  • A luxury holiday you can’t afford: a luxury holiday can be a trip of a lifetime but is best avoided if it requires borrowing that takes ages to pay off. Instead of getting into debt, try and save up first. Plan ahead and see how you can make savings and cut expenses so that you do not take on new debt.  
  • A brand new car you don’t require: If you don’t need to buy a new car, then do not get one. Simple as that, if money is tight. New cars always lose their value quickly and if you were made redundant and struggled to maintain repayments, you might end up with a loan for more than you could sell on the vehicle for. That means you’d have no car but an outstanding debt (and interest) you ar eliable for.
  • Borrowing money to pay bills and or other credit: if you’re struggling to get to the end of the month you can get free confidential advice, which will help you get your finances back on track.

Tips to avoid bad debt

When considering borrowing money, ask yourself the following questions. This will help you ascertain whether you ar emaking a bad decision or not by taking on the debt. If you find yourself saying no to just a couple of these questions, then it is probably best you avoid taking on the debt. Consdier other options. 

Key questions

  • Have I shopped around to get the optimal deal?
  • Am I borrowing this money at the lowest rates availalbe to me?
  • Will I be able to cope should interest rates or costs assocoiated with the loan change in the future?
  • Are the monthly repayments comfortably repayable by me? 
  • Is it truly in my interests to borrow this money? Will i be better off financially once the debt is paid off?
  • Do I comprehend fully the risks of the loan and wunderstand the consequences if things go wrong?
  • Have i read fully and comprehended the terms and conditions associated with the loan?

Bad Types Of Debt – Financial Advice

Here at Moolr, we sell loans. But we do not push loans. We feel loans should be provided for those for whom it is a good idea. We will always advise the rejection of applications if we feel the borrower may struggle to make repayments. Or basically, if we think they are making a bad decision. We have a moral obligation to do so. We want our loans to help others, not hinder them. So if you are considering taking on additional and new debt, don;t be afraid to seek advice. Consider your options and work out if debt is the only path you can take, and only procee dif other avenues have been exhausted. 

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