Quote:
Originally Posted by zx10guy
This is the same as people buying stuff focusing in what the monthly payment is (ie auto purchases). Never mind what the final cost will be once you finally pay the thing off. As cmyx6go said above, you're paying an additional $144 in payments which is really interest in borrowing their money for the 12 months. And you don't even get the courtesy of a reach around as you pay $4, for the privilege of them giving it to you from the rear. That $4 to me is almost the same as the balance transfer fees credit cards charge.
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People's heads would really explode if they knew what a 7% interest rate on a 30 year loan for a house really means
... do you think they know that they pay more than double for the house at that point?
edit - the reason why this works out in the USA... is people look strictly at cash flow... as long as I have positive cash flow I am in a good position... meaning 5 million on debt is irrelevant if I am sitting on 5.5M of assets... now that works, until it doesn't when people lose their jobs and can't make payments... in other countries this doesn't work because a) interest rates are far higher and b) the amount of leverage we allow here WOULD never fly there