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High Debt or No Debt

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High Debt or No Debt

Messagede PeteG » Lun Aoû 07, 2017 21:52

I want to start an open conversation about level of debt and banks.

1-Should players go into high debt to grow their fleet or keep it under control? And what is high level of debt, what is manageable debt.
2- Should loans be paid back early and take them out again or let them roll and keep getting more money (Seems to increase interest rate)

All please weigh in with your experience and recommendations.
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High Debt or No Debt

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Re: High Debt or No Debt

Messagede MossieNZ » Lun Aoû 07, 2017 22:48

As long as you borrow money effectively i.e. Whatever you purchase with your loan makes more per week than what the repayment is, then borrowing has no real downsides. Sure it affects your overal profit, but you still make more money than if you didn't own those planes etc.

As for paying back loans early - there is no benefit to this that I can see. You still pay the full amount, so you dont save anything on interest.
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Re: High Debt or No Debt

Messagede Alain » Mar Aoû 08, 2017 22:15

1 - Debt is a matter of investment vs revenues. Personnally, I consider that 50% (loans + rentals) should never ever exceed this part of your daily (or rather, weekly) revenues.
2 - Depending on you company, it might be usefull to reimburse some of your loans, just to be able to get new ones.

And, against what MossieNZ said, yes, it can be very usefull to repay loans... Calculation matter :mrgreen:
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