Ignorance is the most costly and expensive liability of any individual. Ignorance is simply defined as the lack of information, knowledge, or understanding. The price paid for ignorance is high and the damages are extremely consequential. For example, the interest expense paid during a lifetime by an individual with poor credit is $250,000 higher than the interest expense paid during a lifetime by an induvial with excellent credit. Yes, what you do not know and do not pay attention to has a hefty price tag.
A mortgage is typically the largest debt of an individual, unless that individual has student loans from medical school. Most believe that a mortgage term should be 30 years without realizing a 30-year mortgage term may result in the individual paying at least three times the price of the house over the extended mortgage term. Oftentimes, an individual can reduce their mortgage term to 15 or 20 years with a fractional increase in the monthly mortgage payment. Interest paid over 30 years is significantly greater than the interest expense paid over a shorter period of time.
Few buyers can afford to pay cash for a car. As a consequence, millions of new cars are financed annually. When it comes to matters related to financing a car, it can be challenging. A consumer should be prudent and shrewd when purchasing a car. The same consumer should be knowledgeable and make sure they learn as much information about the vehicle and the financing process. Most times, car buyers are coaxed into purchasing a vehicle they cannot afford due to higher interest rates and long terms that disguise what appears to be an affordable monthly payment. Currently, car loan terms can extend up to 120 months. That is 10 years! Some consumers get 10 year mortgages and other consumers get 10 year car loans. Times have really changed. Let’s not forget the car loan interest rates that soar beyond 20%.
Many consumers do not understand the buying power of loyalty. Let’s think about it. Would a consumer be likely to get a better deal on purchasing their fifth Ford or buying their first Toyota? Loyalty is valuable and it carries a lot of power.
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Nicole Michelle
Finance and Money Wiz
April 12, 2024
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