Are Loan Good or Bad?

When is your loan actually good and not necessary bad?

First, we look at net worth of a person:

Net Worth = Assets - Liabilities

*Assets exclude your residential home as everybody need a roof over their head.

When you are net worth positive, then all your loans can be considered as good loans in the current low interests environment. You should be able to generate higher returns to pay off the interests payable.

Net worth positive means that you have enough assets to repay your debts fully if you are pushed to the corner to do so.