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The Cost of Borrowing

When you borrow $10 from a friend or family member, you pay back the same amount, i.e., $10. But if you borrow from a Caisse populaire, you have to pay interest which means that you’ll have to reimburse a bit more than $10.

Example :

The total cost of a credit purchase depends on the following:

  • amount borrowed
  • interest rate
  • term
Amount borrowed Interest rate

Term

Interest paid

$2 000

10 %

2 years

$215 for a total of $2 215

$2 000

10 %

4 years

$435 for a total of $2 435

Tips on paying less interest

  • Pay back your loans as soon as possible: as a result, you’ll get a good credit rating and save on interest.
  • If possible, don’t borrow money!

 

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