→ What it is
A loan is borrowed money you pay back over time, plus interest. The interest is the cost of borrowing.
→ The Analogy
It's like renting money. You borrow $10,000, but you pay back $12,000 because the lender charges you for the service.
→ Real Example
A $20,000 car loan at 6% interest for 5 years means you'll pay about $386/month and $3,199 total in interest. If you can get 3% interest instead, you save $1,600.
✓ Your move: Take action today
- 1.Always compare interest rates from multiple lenders
- 2.Understand the total cost, not just the monthly payment
- 3.Pay more than the minimum when possible to save on interest
- 4.Avoid payday loans and high-interest credit cards for borrowing