Caisses Desjardins du Québec and Caisses populaires de l'Ontario [Change site]
The cost of credit
There are countless borrowing opportunities, but there are a lot better things you can be doing with your money than pay interest.
The higher the interest rate, the more the loan will cost
The total cost of an item bought on credit depends on 3 things: the amount you borrow, the interest rate and the repayment term. That's why it's in your best interest to save up as much as you can toward it ahead of time: you reduce the amount you have to borrow and the length of time you make payments.
Ideally, if you can pay cash when you buy a product or service, you'll enhance your peace of mind.
Loan amount |
Interest rate |
Length of repayment term |
Extra amount paid in interest |
|---|---|---|---|
$2,000 |
10% |
Over 2 years |
$215 for a total of $2,215 |
$2,000 |
30% |
Over 2 years |
$683 for a total of $2,683 |
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The longer the repayment term, the more the loan will cost
You might be tempted to spread your payments out over a longer period to reduce your payments, but it will cost you more in the long run. That's why it's in your best interest to borrow the smallest amount possible for the least amount of time possible.
Loan amount |
Interest rate |
Length of repayment term |
Extra amount paid in interest |
|---|---|---|---|
$2,000 |
10% |
Over 2 years |
$215 for a total of $2,215 |
$2,000 |
30% |
Over 4 years |
$435 for a total of $2,435 |
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Note that these examples are calculated using monthly payments. Frequency of payments (e.g., weekly, bi-monthly, monthly, etc.) can also affect the total cost of the loan.
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 At the caisse
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Money question
Do you think you use credit well?