If you just pay the interest you owe on a debt, how long will it take to pay off the loan?
Never. Unfortunately, some consumers don’t get this basic premise.
Don’t get me wrong – there IS a place for interest-only loans, and even the quirky and complicated pay-option adjustable rate mortgages.
What’s scares me is that more consumers are not only taking on more debt, but are taking longer to pay it off.
Car loans used to be 3 and 4 years in length. Now, consumers will often choose car loans that last 5 to 7 years – far longer than the average person will keep a car.
School loans are typically 10 years, but more graduates are consolidating or refinancing their loans into 30-year amortization schedules.
And if you only pay the minimum amount due each month, you’ll spend the next 15 to 30 years paying of your credit card debt.
We’re all living longer, but trust me — you don’t want to spend your golden years struggling to pay debts incurred when you were in your 30s.
With practical, informative consumer advice, I’m Ilyce Glink, News-Talk 750 WSB