Are Loans Considered Assets?

A loan on its own is not considered an asset; it is considered a liability. A loan is considered a liability because it is an item that you have an obligation to pay.

A loan may be considered an asset if we talk in terms of what you use the loan to obtain. If you receive a home loan to purchase a home, then you will have acquired an asset.

The same applies for using a loan to buy a vehicle. The asset is the object that generates income for you or you can sell.

Loans aren’t considered assets unless you have borrowed the money to purchase an asset.

Loans are also used to acquire assets that you can generate future income from.

 

 

 

 

 

RELATED LINKS