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Interest Only Loan Rate - Is it Good For You?
By Michael Clifford Ramsey Just Pay the Interest - Attractive Solution? As evident from the name, the interest only
loan requires you to pay just the interest every month. From the look of it,
this is the best solution in deep financial crisis and is the reason many
may opt for such loans. If you have a poor financial capacity staring you in
the face, there is nothing much you would reason before getting a loan. This is a highly attractive solution, if you
want to get the creditors of your back. Take an interest only loan from a
bank and worry only about a single problem. That can be a huge relief to
many people who have to deal with nagging creditors everyday. Unfortunately,
the picture is not as rosy as it seems. Instant Relief or Not? Typically, such loans are most attractive to
people that are in deep financial problems. At such times your reasoning can
get muddled and very near sighted. For example an interest only loan for ten
thousand dollars would give you instant relief from the financial stress
that you are going through. Though this looks simple, it can actually be
a problem for you. At 10% interest rate, for a $10,000 loan, you pay $10,00
annually. Now this is not a huge loan to repay, but the principal amount is
not touched, which means you will keep paying the interest forever. Check Alternatives Short terms benefits superseding long term
impacts are not new, especially when the situation is very bad. If the
interest only loan seems to be the perfect solution for you, it probably is
not and you are missing something. So give it a careful thought. However, the interest only loan is not always
bad. There are situations where it can be a good financial tool too.
However, there may be other alternatives too that you may want to explore
before zeroing on the interest only loan. If you have a short term crisis
and want some quick, no-frills financial solution, the interest only loan
may be a great option.
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