Credit Costs

Credit cost can vary between company to company. You just need to make sure you can afford the cost of the credit you want. This is where many people get over the heads in debt. They think they can afford to have a hosue financed, can't pay the bills, and have the house reposessed. You also have to take into account the fact that credit companies have service charges. When you sign papers for any kind of financing make sure that the creditor tells you what your annual percentage rate (APR) and finance charge will be. This is a Federal Law! All banks, stores, credit card companies, and finance companies must disclose this information to you so that you can shop for the best creditor for you. Be careful when financinig a purchase.

It is easy to buy something for a very large amount when you pay a small monthly fee for it. Say you buy a car for $15,000 and make a downpayment of $1,250. You have to borrow $13,750. If you finance $13,750 for 4 years at 14% APR you will pay $326.56 per month. You end up paying almost $2000 dollars more than what the car actually costs to the creditor. The longer you finance your purchases the more money you will pay over time. As for credit card companies, they will quote you the APR as 23% and charge you a monthly rate or 17%. Of course, this does not include the service charges, transaction charges, or points. It is very easy to get yourself into bad debt if you are not taking the cost of credit into consideration. Credit will let you achieve owenership of the things you want, but they come at a price. You cannot have something of value without paying for it first. Someone who has delt with credit card debt will tell you that by. Make sure that what you buy is worth the cost because credit will cost you.