Part 3/7:
The Dangers of High Loan Interest Rates
Moving on to loans, it's crucial to recognize the severity of high-interest rates. As of late, loan rates have escalated to monumental numbers, often exceeding 25% annually, which can devastate personal finances. For example, if you take out a $10,000 loan, you could end up paying $3,000 just in interest.
Smart financial planning recommends paying off high-interest loans immediately. While some level of debt can be manageable (loans under 5% can be fine), you shouldn't fall prey to credit cards or other forms of debt that carry exorbitant interest rates. Always choose financial products that allow you to create returns that exceed the cost of borrowing.