Question for the Money Doctors
Question submitted on Aug 23, 2011.
QuestionI recently took out a loan and feel I was duked and cheated because the lender did not tell me the loan used the rule of 78''s it is $9000 and in the end will cost 19000 - 60 months later. What is the best way to try and get out of this, for example put all the money I can into paying it off or save the money in saving until I have one lump sum or what?
Depending on how long it has been since you signed the loan documents, you may be able to go back to the lender and cancel the loan. Some states allow 3 – 5 days for you to change your mind when signing a contract. Assuming that you cannot cancel the contract, then you might try to refinance the loan as soon as you are able. This type of loan effectively forces you to pay mainly interest up front and principal on the back end. Without knowing your situation it is hard to access why this lender used this type of loan structure. It could be due to your credit situation or debt to income ratio. If you have any credit issues, I would attempt to get them resolved and refinance the loan. That should save you a lot of interest over the next five years. I hope this helps.
Cory S. Colquette, MBA, CPA/PFS
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