Equity 1 Group
Pushing back the frontiers of economic ignorance and restoring sound financial foundations, one family at a time.

The Cost of Having Bad Credit…..

Example 1:  Automobile Financing

Following example is based on a $20,000 car financed for 5 years.

Credit Status      Rate      Payment      Total @ 5 Years      5 Years/Monthly

Perfect               5%       $377.42       $22,645.20            $0.00

Mild Damage       12%      $444.89       $26,693.40            $4,048.20 / $67.47

Damaged           20%      $529.88       $31,792.80            $9,147.00 / $152.46

Example 2:  Home Mortgage

Following example is based on a $250,000 home financed for 30 Years.

Credit Status    Rate     Payment       Total 30 Years     30 Years/Monthly

Perfect             4%     $1,193.54      $429,674.40       $0.00 / $0.00

Mild Damage      6%     $1,498.88      $539,596.80       $109,922 / $305

Damaged          8%     $1,834.41      $660,386.60       $230,712 / $640

As you increase your credit score, you’ll qualify for lower interest rates.  This means that you pay less to borrow the same amount, resulting in a savings to you.

For example, the following chart shows what interest rate and monthly payment you could expect to pay on a $150,000.00 30-year fixed-rate mortgage:

Credit Score     Interest Rate     Mo. Pymt     Interest Paid    

720-850             5.25%             $828           $148,191

700-719             5.69%             $870           $163,200

675-699             6.23%             $922           $181,920

620-674             6.88%             $985           $204,920

560-619             7.38%             $1,037        $223,320

500-559             8.53%             $1,157        $266,520

Your monthly payment can fluctuate by 30 percent, just based upon your credit score alone!  More importantly, the total amount of interest paid throughout the term of the loan can fluctuate by as much as 50 percent.  In the above example, a borrower with a credit score in the 500-559 range can expect to pay up to $130,000.00 more in interest than a borrower in the 720-850 range over the same 30-year term.

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