What amount would you feel comfortable taking a loan on? How much will you owe on...

What amount would you feel comfortable taking a loan on? How much will you owe on that amount?

Expert Solution

There are many factors that need to be considered before taking a loan on.

1) The purpose of the loan. Whether this loan would create a depreciating asset or an appreaciating assets. If the loan is creating a depreciating assets like a personal car then amount of loan should be low and if it is creating a appreciating assets like Gold then it could be high.

2) The tenure of loan is also important. The tenure of loan should be short possibly to avoid paying more interest.

3) The EMI is also important. The EMI should be stress free. There should not be mental burden on the borrower. It creates stress if loan EMI is very high.

4) The rate of interest is also important. If rate of interest is high then loan amount should be as much as it is necessary. High rate of interest loans should be avoided.

5) The amount of loan also depends on the nature of income. If Income is stable then loan amount should be decent but if income is not stable then loan amount should be very low.

jeff jeffy answered 1 year ago

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