Question

Ronald has researched the costs of getting a loan and taking on credit. He finds it impossible to avoid getting charged for interest and decides that he should never take out a loan because it will cost him too much. Evaluate Ronald's decision.

Ronald should reconsider his decision; some loans do not charge interest or accumulate fees.

Ronald should reconsider his decision; there may be some purchases in the future that he cannot pay for immediately.

Ronald's decision is realistic; taking a loan will increase the cost of a purchase he pays for in another manner.

Ronald's decision is realistic; he is unlikely to ever encounter a purchase that would require a loan.

Answer 1

Ronald's decision is realistic; taking a loan will increase the cost of a purchase he pays for in another manner.

All loans charge interest. It only varies on the interest rate given. It also charges additional fees in the event monthly amortization is not paid or is paid later than the agreed upon date.

When you purchase an item, it is better to pay for it in cash rather than pay for it in credit if you know it is impossible to avoid getting charged for interest. It is better and practical to save up for the purchase.