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Loans
The biggest trap to avoid with any kind of loan is one where you pay it back too slowly. Low repayment loans always seem like an affordable deal - you only have to pay back twenty bucks a week, so you think, 'wow! I can spare twenty bucks a week no trouble!'
The problem is, the more slowly you chip away at the principle loan amount, the more the interest builds up. In the long term, low-repayment loans are in fact the most expensive type of loan.
This can particularly be a problem if you're buying something which depreciates in value quickly, like a car. The car's value may very well be decreasing faster than you're paying for it. This may mean that after ten years of making repayments, you will still owe more on the car than it's actually worth. If the car is stolen or written off and it's only insured for its resale value, you could be making payments for several more years on a car you don't even have.
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