BUSN235
Identifying your Debts & Analyzing your Risks
American Public University
COURSE: BUSN235
Identifying your Debt & Analyzing your Risk
Identify and analyze your debts
To have a clear understanding of what secure debt is, and what is debt finance let define
it. According to US News, secured debts are simply assets that are protected. On the other side,
The Economic Times stated that when a company borrows money to be paid back at a future date
with interest it is known as debt financing. It could be in the form of a secured as well as an
unsecured loan.
In our case, the assets that secure our debts are a house and two-car loans. On the other
hand, we have a personal loan which we are making payments with interests every month. We
also have credit cards but I don’t pay interest because I make lump payments to avoid paying
interests.
The cost of our debts is the average interest rate we pay for our house, the cars and
personal loan. What determined those costs is how we calculate the debt. Bench.co gives an
example of how we can calculate this. by What risks do you undertake by being in debt? How
can being in debt help you build wealth?
Risk and the 5’s
Are you considered a default risk? How would a lender evaluate you based on "the five
C's" of character, capacity, capital, collateral, and conditions? How could you plan to make
yourself more attractive to a lender in the future?
