Bad credit can cost you money, we all know that, but most people don’t realize how expensive bad credit can be. Your credit score plays a big factor in how much to pay for your auto insurance, auto loan, mortgage and credit card monthly payments. If you have good credit credit you will pay less in interest and get better terms but if you have bad credit you could be paying a high interest along with other fees costing you more money. In this article we will discuss how much money bad credit will cost you.
Auto loans are available to anyone who wants to buy a new or a used car, but how much you will pay mostly depends on your credit score. For instance, if your credit score is 720 or higher you will qualify for the lowest interest rates but if your credit score is below 600 you will be paying the highest rate interest rates. Let’s look at the calculations if you have a $20,000 auto loan for 60 months using FICO rate estimates:
Credit Score Below 600
APR: 18.8%
Monthly Loan Payment: $499
Total Interest Paid: $9,945
Total cost of bad credit: $126 per month and $7,537 over the life of the loan
Credit Score of 720 and Above
APR: 5.67%
Monthly Loan Payment: $373
Total Interest Paid: $2,408
Credit Cards
Bad credit can cost you tons of money when it comes to credit cards. If you have a credit score below 600 you won’t get approved for unsecured credit cards and will need to start with secured credit cards until you increase your credit score.
A secured credit card is a type of credit card that requires a deposit and that deposit will be used as your credit limit. For example, you apply for a Citi Secured MasterCard that requires a deposit minimum of $200. That $200 will then be used as your credit limit, meaning you can spend up to $200 to use your credit card. Secured credit cards not only includes a low credit limit where you can’t spend a lot of money to use it, but it also has very high-interest rates averaging around 23% APR. Click here Fast credit repair
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