Is this a normal loan?

Discussion in 'Business & Economics' started by Avatar, Jan 14, 2008.

  1. Avatar smoking revolver Valued Senior Member

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    19,083
    Is it considered normal in your country if, for example. I take a loan of USD 300,000 for 30 years
    and that in the monthly payments in 30 years I end up paying the bank USD 620,000?
     
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  3. draqon Banned Banned

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    yes

    although I nor my family does not make such high loan

    and that apr is really high
     
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  5. cosmictraveler Be kind to yourself always. Valued Senior Member

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    An example is a home loan which you borrow 300,000.00 for 30 years at 6 percent interest, which is low but not unheard of in todays market. You do the math and you'll see that your payments will exceed 600,000.00. Most payments of this amount are about 1700.00 a month or thereabouts so multiply that 1700.00 by 30 years and see what you get.
     
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  7. Read-Only Valued Senior Member

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    Not quite but pretty close in today's lending market.
     
  8. 420Joey SF's Incontestable Pimp Valued Senior Member

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  9. Stryder Keeper of "good" ideas. Valued Senior Member

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    The longer the loan the larger the sum required. I mean that money loaned to someone could of floated a few points on the stock market and made (or lost) a higher percentage than the loans set for during the duration of the loan. So technically loaning money can be seen as a loss to lenders.

    Basically the higher the risk the larger the return, and risking money on someone for 30 years who might get mowed down by a bus or skip the country is a big risk.

    If you look at loans for shorter periods of time then you'll notice the decrease in gain by the lender. (Most 30 year loans can't be done with at least some collateral, like mortgaging someone's home, although Businesses can gain such loans without the need of someones home however they do require an awful lot of groundwork in regards to winning over the Bank Managers with Business Prospectus,Market Research, Forecasts and of course Partners/Directors that share the burden should the venture collapse)
     
  10. draqon Banned Banned

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    dont take loans people...it will wear you out and strip you of money. Just rent place/things and such.
     
  11. pilpaX amateur-science.com Registered Senior Member

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    here in estonia its possible to get up to 1000$ loan by simply sending sms with your bank account... if you take 1000$ you must pay back 1130$ in 15 days, or 1150$ in 30 days.
    theres lots of scams as you might wonder
     
  12. Avatar smoking revolver Valued Senior Member

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    19,083
    Sometimes rent is higher than the monthly payment. You've got to pay rent any way, so might as well own the place in 30 years.
     
  13. nietzschefan Thread Killer Valued Senior Member

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    Now do you see why money is basically worthless? 300000 in interest. 300000 FOR NOTHING. See why for example the cost of living(i.e rent) is exponentially growing?
     
  14. Avatar smoking revolver Valued Senior Member

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    19,083
    C'est la vie.
     
  15. Stryder Keeper of "good" ideas. Valued Senior Member

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    13,105
    Actually this is the reason that people gain Loans to buy properties then adjust the rent to at least cover the loan repayment. It can be the first step onto the property ladder, since you repay the loan, gain a mortgage on the property (Which payments are again less than the rent) and purchase another property. Then with both properties being rented, you pay off a mortgage and gain another one to buy yet another property. (Just remember to take into consideration property taxes that you will have to pay for).

    While houses prices fluctuate up and down it is possible to sell a property and make a profit, however having the continued expansion of property means you always have an income to fall back on and the banks are happy as long as the properties are rented. (Just remember that Rent should always cover Mortgage, Tax, Insurance and a little bit extra to speed the accumulation of property up.)
     

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