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When we enter into a loan agreement we are agreeing to certain terms and conditions.
You need to be aware that when you borrow money there will usually be interest added to the amount you pay back and sometimes if you miss payments there can be harsh penalties which mean they hike up the amount of money you owe!
What is 'interest'?
What is 'interest'?
A lender doesn't give you that money for free. They charge you a fee, and that fee is called "interest." It's usually a percentage of the total amount you borrowed. For example, if you borrow $1,000 with a 5% interest rate, you'll have to pay back $1,050.
When you start repaying the loan, you pay back the original amount (the $1,000 you borrowed) plus the interest (the extra $50 in this example). So, you end up paying back more than you borrowed.
Interest is how lenders make money, and it's the cost you pay for the convenience of borrowing money when you need it.
Be wary of buy now, pay later
Be wary of buy now, pay later
Afterpay and similar "buy now, pay later" services make it easy to purchase items without immediately feeling the financial impact. This can lead to overspending, as people may buy more than they can afford, thinking they can deal with the payments later.
These services often charge fees or interest if you miss a payment or don't repay the full amount on time. This can add up quickly and make your purchases more expensive than if you had paid for them upfront.
Before using these services, it's crucial for buyers to think about what they really want or need, instead of making impulsive purchases. They should also carefully assess whether using these services fits within their budget and if they can comfortably make the repayments. Otherwise they may end up owing money that is hard to repay.
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