Posted on October 9, 2011.
I Am Trying to discover Why amortization IS Amounts Used to exorbitant extortion of money for mortgages, car loans & the like.I want to know how loans Were Before amortization and how to Change the system to make this more equitable for buyers Things.
Becky Antillon says...
Loans were never before amortization, except that if you didn't pay them back you were either thrown into debtor's prison, sometimes along with your family, you were tortured, sold into slavery, etc. Amortization is used because how else would you figure out how much you need to pay to pay someone back for what you borrowed? If you borrowed $100,000 from someone, you need to pay them back the $100,000 plus interest. If you don't want to pay interest, then you won't really find anyone willing to lend to you. Amortization makes it possible for you to pay the same amount each month, and increase how much of your payment is going to principal and decrease how much is going to interest. The more time you have to pay it off, the slower the increase to principal and decrease to interest will be. The less time you have to pay it off, the faster the increase to principal and decrease to interest will be, but the amount you pay each month will be higher.
If you want though, you can always try having an interest only loan, or a negative amortization loan where you have low monthly payments, but then down the road when the loan matures, you'll have a very unpleasant surprise as to how much you have to pay then.
Posted on October 10, 2011
