Things to know about debt and its different types

Debt is the money you take from somebody in times of crisis. Debt has to be paid back at a fixed period of time.

What is debt collection?

Debt collection is a process of recovering the money owed by people. This process is usually done through agencies.

Types of debts

There are different types of debts. We will be discussing some in this article.

  • Student debt. It is the loan taken to pay for your educational expenses. There are many people who wants to study in their dream colleges or universities but they cannot afford to pay the fee. So, they take student loan which can easily help them to complete their education. When they graduate and get a job, they pay the loan back.
  • Credit card debt. Credit card debt is the result of purchasing items or goods through the card system. Companies issuing credit cards charge very high interest rates. Credit card debts should be paid on time otherwise there will be a penalty for late payment. Credit card companies have a schedule of payments. If the cards are used intelligently, they can prove to be beneficial to the holders. Credit cards can also be harmful to the health of the consumer. What happens is the debt keeps increasing and people are unable to pay it until a time comes when things are out of hand. So, make sure that you are financially stable to pay off your debts.
  • Auto loans. Auto loans are classified as bad debts. Auto loan is taken so you can either purchase a car or vehicle according to your need. They work on the principle of simple interest and are paid back after 3 to 5 years. This type of loan is paid in installments over the whole time period of the loan.

What is debt consolidation?

Debt consolidation is the process of taking new loan to pay off numerous other loans. All the debts are brought together into a single loan with payment once a month.

Debt consolidation is classified into two types.

  • Secured debts
  • Unsecured debts

If you want your debt to be collected through a debt collection agency in UAE, contact Aman for Debts Collection. It is an agency for debt collection in UAE. It is considered as one of the best agencies.