If purchased on a credit card with a 12% annual percentage rate (APR) compounded daily, and with minimum monthly payments of $166 paid over three years, it winds up costing over $5,980. Here is an example: a new television flat-screen HDTV model retails for $5,000. If one calculated the true cost of goods bought on credit, one would have second thoughts about making the purchase in the first place. Many impulse purchases are made on credit with little thought given to how the debt will be repaid in the future. One should never use credit to purchase things for which one will not be able to pay in the future.
Credit abuse increases the cost of credit to everyone. Goods and services are provided on credit with the expectation that they will be paid for with money in the future. Credit is extended with the faith that borrowers will repay the debt. While credit is very important to the economy, its abuse is harmful.
The marketing is so aggressive that consumers may lose sight of the fact that this is not free money and make excessive purchases to the point where they find themselves in financial difficulty. This is why credit card companies aggressively compete to get you to use their credit cards and services. This represents hundreds of billions of dollars in interest earnings to lenders.
According to the Federal Reserve, there was more than $2.5 trillion of consumer debt outstanding by late 2009-this is more than double the amount outstanding in 1994. Credit is issued by banks, savings and loans, credit unions, public utilities, and even merchants. Today, credit has become a business in its own right. One should not use credit in place of money when there is little or no likelihood that payment in real money will be made-using credit without the intent or ability to pay is theft. Derived from the Latin word for "trustworthiness," credit is based on faith that the borrower will repay the debt with real money. Other restrictions may apply.While credit stimulates the economy, it does have to be used judiciously. All loans are subject to credit approval. Information and/or dates are subject to change without notice. This is not a commitment to lend or extend credit. The content provided within this website is presented for information purposes only.
Speak to your financial advisor, mortgage loan originator, cpa or other trusted industry professional to discuss your personal situation.Īll content on this site is that of our opinion and is for educational purposes only. Items such as but not limited to: terms, meanings, calculations, guidelines may change over time and at any time without warning or notice. It is not financial advice, nor advice in any way, it is only our expressed opinion. We strive to provide the content you need in the format you require.ĭisclosures:- All the articles and content on our site is only hypothetical. If you have difficulty accessing content, have difficulty viewing a file on the website, or notice any accessibility problems, please contact me to specify the nature of the accessibility issue and any assistive technology you use. SourcesĪDA Compliance:- In concurrence with the National Association of Realtors guidelines, Mortgage Quote and Jumbo Loan is committed to providing an accessible website. Using a mortgage calculator can help you work out whether paying off your mortgage early is the right option or not. You also need to check that there are no early repayment fees on your mortgage because this will negate the savings you make. Others prefer to spread the payments across a few months or years just so they do not incur additional expenses such as credit card debts or bank charges because they have stretched their personal finances. Some people choose to pay a larger amount each month in order to pay their home loan off as soon as possible. Payment plans for mortgages vary so it is important that you research this before making any final decisions. You can then use an online mortgage calculator to work out how much you will save and by when. In order to calculate how much you will save by paying off your mortgage early, you need to know the current interest rate and what percentage of the loan has been paid. However, many people choose this option because it means they save money in the future and pay their loan off faster. Naturally, paying a larger amount each month will put more strain on the finances in the short term. When deciding whether to pay off your mortgage, you need to consider your finances and the use of a mortgage calculator for early payoff.