Quote:
|
Originally Posted by gary_580
Trouble is there is all this new credit with people consolidating loans. Does it take into account the loans that are paid off?
I think they should kill these adverts on day time TV "Consolidate your loans and reduce your monthy payments" why does it reduce your mnthly payments? cos your paying it over a longer period of time and paying more!!!! Too easy for people to get sucked into that one. They consolidate and then what do they do? Borrow more cos they can then afford too.
|
How does it reduce monthly payments?
Quite simple
1. You owe say 20K on a card at 18.9% ( a typical rate)
2. If you make minimum payments (2-3%) that will take in excess of 16 years to clear.
3. Switch to a lower card (there are ones @ 9.9%), the interest you are being charged is simply cut in two. Still takes 12+ years to pay off mind
4. To *really* save money, remortgage down to 4+%, interest being charged is cut by a factor of 4.
5. Yes you are paying for it over the length of the mortgage, but you WERE DOING THAT ALREADY....
6. The really *SMART* thing to do, is not to take all the savings, leave some of it on the table and pay the entire mortgage off early....
..and yes, it is my job.