Was going through some online video segments and I saw a quick ad from a certain big-name bank plugging a $40,000 loan for $283 a month. Wow, that doesn't seem too bad, does it? The web ad even lists some of the other things you could spend that much money on per month of that $40,000 loan. Things like four dinners out per month. Hey, you could forgo four expensive restaurant dinners per month and afford to remodel your kitchen! Doesn't that sound neat? Well it would... if you go to expensive restaurants four times a month.
There's just one little thing wrong with this idea: the math. $283 per month for a $40,000 loan means you'll be spending almost TWELVE YEARS of your life paying that loan off! That's a pretty LONG time to go without restaurant dinners.
And that would be if you were just paying the straight value of the loan! Let's not forget interest. Oh yeah, that's where the bank really gets its money from! Are we talking a fixed rate or one that changes with the economy? Even on the low end you're looking at maybe fifteen-to-twenty years to pay off that $40,000 loan at $283 per month.
All of a sudden that doesn't sound like a good deal, does it?
It's rather deceptive, though. Sort of like that charity commercials that promise you can help out some starving child for "just pennies per day". Yeah it all sounds cheap, until you start doing the math.
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