Low Interest Loan

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IO’s: Low interest rate Loan with High-Risk Costs

Initially, an interest only loan, or IO, would seem to be the best low interest loan for a period of five or ten years, you spend nothing but interest charges (which, on a low interest rate loan, can be almost nothing when compared with traditional mortgages), therefore lowering your payments and making it possible to purchase a higher priced house than you’d have been able to afford, otherwise. But why don’t we stop just a minute and see whether this low interest loan is really just about all it’s cracked up to be.

The thing in regards to a mortgage payment is that you possess two figures you are dealing with first, the expense of the house second, the price of the interest. Traditional home loans start off as mostly interest with a little part of your monthly payments going towards reducing principle–that is, the cost of the actual house–but as the principle is gradually lowered, your amount of interest you’re having to pay each month begins to lower, so that more of your payment goes in the direction of principle. The result is a kind of snowball effect in which, especially with fixed rate mortgages, pays off your home in slow but regular segments no unpleasant shocks, no rude surprises.

With an interest just loan, however, you’re having to pay only interest for that first five to ten many years. That tiny bit associated with payment on basic principle (which gradually raises to a large payment on principle as increasing numbers of of the principle is paid off and interest payments become smaller) is actually missing–which leads to a short term acquire, but, perhaps, a permanent loss. Because, the truth is, at the end of those 5 years, *you still have the entire repayment to make*, only now you’ve only 25 years in order to spread payments over, rather than 30 or 35 years. This really is bad news for most property owners, even if you have a low interest loan. This means a huge begin payments, and it ought to cause most people to think long and hard about whether this kind of loan, low interest loan or otherwise not, is right for them.

Comments: 10

  1. Normand July 23, 2013 at 2:28 am Reply

    Looking for low interest loan that we can combine all together

  2. Hilton July 30, 2013 at 4:52 am Reply

    I have a ton of revolving debt (mostly credit cards) and just bought a house 5 months ago so I don’t have much for collateral. I’ve already been denied by a bank so is there anywhere I can turn to for cosolidation purposes that isn’t going to kill my credit? I want to consolidate my high interest credit cards onto a lower interest loan and need suggestions.

  3. Gabriel August 6, 2013 at 4:37 pm Reply

    So I am planning on applying for an auto loan through chase but before I do so I was hoping that someone may be able to tell me if you think my credit score is good enough to get a low interest loan. Currently through experian my credit score is a 711 I have no accounts in collections or delinquent accounts. I plan on getting a loan for a car that is no more the $15,000. Just a brief answers, a yes or a no is fine too. thanks for the help. By the way if its important my age is 23.

  4. Jestine October 7, 2013 at 5:46 am Reply

    I have access to a low interest loan program. If I were to just take out a loan for the down payment and closing costs of an FHA mortgage would this effect my chances of getting the loan? Thanks

  5. Eusebio October 10, 2013 at 4:10 pm Reply

    a. the dangers of an inadequate monetary supply
    b. the reform of the spoil system
    c. the formation of postal banks to provide low-interest loans
    d. the government ownership of railroads

    ( U.S History)
    Thank you for all of your answers ^^

  6. Pedro October 19, 2013 at 5:47 pm Reply

    Theres a 2003 G35 Infiniti Coupe Sport that im wanting to buy from a dealership but its family owned and wont take trade ins but they do finance. The problem is I have a 2007 honda civic im not dissapointed of just the embarassment that it doesnt have what I want in horsepower. The thing Is i dont know what I need to do to get this car. The price of the coupe is almost the same amount of the car that I have now but I dont know what Im going to do with my civic if im approved with a low interest loan with the dealership for the car that I want.

  7. Lanell November 27, 2013 at 2:52 am Reply

    Also where would i try for a low interest Loan?

  8. Monte December 3, 2013 at 6:31 pm Reply

    I have an offer for a low interest loan It offers 2.9% then states a 22.9% annual interest rate. Is that two different things? It is from a high risk lending agency that I did not apply.

  9. Columbus February 13, 2014 at 7:39 am Reply

    My first time engaging in loans. Generally, what is the preffered num of years for a home loan. 40 yrs to pay or 20 yrs? (longer or shorter years?)
    POSB, UOB & Standard Chartered where the banks that give thier offers, any idea which bank most people choose? thanks in advance guys!

  10. Normand June 23, 2014 at 4:36 pm Reply

    I graduated college in 2010. I have $42,000 worth in student loans. Although I pay $300 every single month, this amount never went down. I found out that I am being charged $7.50 A DAY in interest which is over $200 a month. At this rate, I’m getting nowhere and wasting money. Being a recent grad, I don’t have really any credit, especially because of these loans. Is there somewhere that will pay these loans off for me and then I can pay them back at a lower interest rate? I already tried the bank and they said I need collateral for a loan this big but being a recent grad, I don’t really have any (I’m still paying off my car). Is there anywhere that will help?

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