Quote:
Originally Posted by fris
Curious say someone lends you 5k, so $7500 in return, is that nuts?
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It's nuts if you are the one borrowing the money, but easy cash for the lender. Even if it is a bank or credit card giving you years to pay it back, it's still a ripoff for you.
If you need to borrow money, here's some tips:
- Lending is big business, and lends will compete to get your business. Shop around
- Paying back the loan faster will save you money. Make sure you have that option.
- Never make the minimum payment. Each payment back should be as much as you can afford.
- Only suckers pay 19% interest rate on credit cards. If you are paying this now on any card, call the card company and ask for a lower rate. Trust me, you will easily get 14% or even 9% just by asking. If they don't want to give it to you, tell them the competing card company (Mastercard for example) already offers it.
- Many card companies will offer you a huge discount on big loans like $5000. Even if you are paying 19%, call your card company and tell them you want $5000. They will give you the money via direct deposit to your checking account for 4.5% or less. (*)
- (* there is a catch. Most of the time they will give you 4.5% as long as you pay the loan back within 6 months. If you go past 6 months, the rate may increase to their normal rate of 12% or 19% or whatever you pay now. So if you take this route, do your best to pay it back.
- You can also try your bank but usually they make it more difficult to borrow money, however they have a cool product known as a debt reconciliation loan. The bank will lend you money to pay off your debts (credit card, government, etc), at a rate much cheaper than you are already paying. Doing this gives you 1 monthly payment to make every month, and saves your credit rating if you were in danger of messing it up by not keeping up with your payments.
Finally, lenders WANT to work with you. They are selling you a super profitable service after all. The easier you make it for them, the more they like you.