Bad credit ruins
lives. The difference between living life and struggling to survive is
based completely on credit quality. Let’s look at a car as a simple
example. Most people in today’s society need a vehicle to get around.
A $20,000 car loan with good
credit will cost approximately $322 monthly. This is based on a 5%
interest rate for 72 months. The exact same $20,000 car loan with bad
credit will cost approximately $541 monthly. This is based on a 21%
interest rate for 60 months (bad credit means a higher rate and shorter term).
This is the same car, but
one is costing $219 more EVERY month. The person with good credit will pay
$23,184 for their car. The consumer with bad credit will pay $32,460 for
the same car. That’s a $9,276 difference. This means the same car
will cost the consumer with bad credit 46% more than the one with good credit.
These examples are not
extreme. These are based on common interest rates you will actually see
on a $20,000 auto loan.
Rent and home expenses are
another area where customers get taken for great amounts of interest. A
$100,000 mortgage costs a good credit consumer $577 monthly and $207,720 over
30 years. The same home would cost a family with challenged credit $841 monthly
and $302,760 over 30 years.
The consumer with good
credit will pay $264 less per month and save $95,040 over the lifetime of the
loan. That means the person with bad credit will pay $95,040 more in
interest for a $100,000 loan, due to their credit.
Credit cards might cost $116
more monthly based on credit. Utility payments are higher, insurance payments
are more, and so are many other regular family expenses.
Most people know credit has
an adverse effect on their life. But the truth is, bad credit controls their
lives. Outrageous amounts of extra interest are being charged each and
every month. That debt and those higher payments strap most families,
forcing them to live paycheck-to-paycheck.