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Loans affect negatively on our economic situation as the process we take loans for doesn't get the profit we need or expect so we suffer from money shortage on pay off debt
Loans have positive result for the economy. One of the most common source of financing after equity capital. I will give you an example: You have small and profitable business, you want to increase the scale of activity, employ new employees, buy a new machine or just replace the old one. Retained earnings and savings are not high enought. Sometimes loan is the only way to push your business into prosperity.
Loans one of the tools used to achieve development and economic stability for example, in cases of economic recession directed state banks to lend and encouragement through interest rate cuts and in cases of inflation lifted the state of the interest rate in case of problems such as the housing crisis state encourages banks to lend for housing and so on
aking loans/availing credit is called leverage in simple financial terms. it simply means that when you dont have "own" capital you are putting other's capital to use and paying a rent for it. It is exactly like living in a rented house. So the rent you pay is the interest on the loan, the use of the house is the use of capital that you borrowed.
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Taking loans is an integral and essential part of an economy. When does it become harmful - It becomes harmful in extreme situation. When you over impact, and you are unable to repay the interest and part of the principal every month (or a certain duration) from the earnings of the business that you are conducting with the borrowed capital, then you eventually run into risk of bankruptcy.
