What would my loan payments be?
The loan amount, the interest rate, and the term of the loan can have a dramatic effect on the total amount you will eventually pay on a loan. Use our loan payment calculator to determine the payment and see the impact of these variables on a specified loan amount complete with an amortization schedule.
Measuring the Cost of Money
Interest is the charge added to a loan that makes up the cost of money. Interest is usually expressed as a percentage of the loan principal. The principal is the original amount of the loan. The interest rate tells you what percentage of the unpaid loan will be charged each period. The period is usually a year but may be any agreed-upon time. Here is how it works. Let's say you loan your friend $100 at 5% annual interest. At the end of a year—the period—you should receive $105, or $100 of principal and $5 interest. Simple, isn't it?
Let's say your friend doesn't repay the $100 principal, but pays you only the $5 interest; then the next year your friend will still owe you the $100 plus another $5 in interest. The preceding is an example of simple interest. Simple interest is the amount of money to be paid each period on a principal amount due.Click here for full article
Responsible Use Of Credit
While credit is very important to the economy, its abuse is harmful. Credit is extended with the faith that borrowers will repay the debt. Goods and services are provided on credit with the expectation that they will be paid for with money in the future. Credit makes commerce more convenient. When credit is abused, everyone loses. Credit abuse increases the cost of credit to everyone.
One should never use credit to purchase things for which one will not be able to pay in the future. Many impulse purchases are made on credit with little thought given to how the debt will be repaid in the future. If one calculated the true cost of goods bought on credit, one would have second thoughts about making the purchase in the first place. Here is an example: a new television flat-screen HDTV model retails for $5,000. 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. Is it worth almost $1,000 more to have it now (furthermore, the retail price in 3 years will probably drop)? That is like going into a store that advertised "SALE--ADD 20% TO EVERY PURCHASE."Click here for full article
How Much Debt Can You Handle?
If you feel that you have too much debt, you are not alone. Most people have substantial debt; many have more than they can handle. However, debt is not all bad. Sometimes it makes sense to use borrowed money for investments. However, most folks are not using debt in that way; they are using it to make ordinary purchases of things they would probably be better off without, anyway. In our competitive society, spending has become a status symbol. This encourages people to spend more than they should -- more than they have. Consequently, they run up tremendous debt.
While some debt is okay, too much debt is not. So, how do you know whether you have too much debt or not? First let's look at the different kinds of debt we might incur.Click here for full article
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