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October 22, 2014

Homework Help: loans

Posted by Camille on Tuesday, March 20, 2007 at 9:27am.

What are some examples of inexpensive loans and some advantages and disadvantages?

There is no disadvantage to taking out a loan with an interest rate that is less than you could get in an insured savings account. You can reinvest the money and end up with "free" cash flow. The only disadvantage might be in having to buy an article that is overpriced in order to get the loan (as is usually the case with zero interest rate car loans, for example). There can also be disadvantages if there are large penalties for late payments, cash advance fees, prepayment penalties, etc. You have to read the small print and be diligent about paying on time.

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