Differences between Good Borrowing and Bad Borrowing

Good Borrowing	Bad Borrowing
A borrowed amount that charges an interest rate between 7% – 11%	Borrowed money with an interest rate above 15%
An amount borrowed after fact- checking and legally signed contract.	Money borrowed without formally signing contract.
Amount taken within the paying back capacity of the borrower.	Money borrowed beyond one’s paying back capacity.
For example- buying a bike and paying EMI via monthly salary.	For example- loans taken for marriages or for buying an expensive bike to please society and cannot afford to pay back by salary.
A loan in which payment payback is longer and interest rate is fixed.	A loan in which payment payback period is short and interest may vary.
A loan given by a reliable lender that comes under the ambit of law.	Money borrowed by a lender that has no standard practice with borrowers, and have biases for borrowers etc.
	Money borrowed to payback another loan. For example, we might take a loan from a money lender to payback a loan taken from a commercial bank, but we do not have any other way to pay back the moneylender, leading us into a debt trap.

To learn how to borrow safely, keep reading