Interest Mitigation Strategies | Loan Optimization
According to the Urban Institute, originations for first mortgages totaled $1.8 trillion in 2017. In addition, NADA (National Automobile Dealers Association) reports that in the United States, the nation’s 16,802 franchised dealers sold 17.14 million new vehicles in 2017, and total new-vehicle sales topped $1 trillion. If as in years past, approximately 70% of these new car purchases were financed, total new debt for new passenger car purchases would be approximately $700 billion. With the total value of new debt in these two categories exceeding $2.5 trillion for 2017, and assuming an average interest rate of only 5%, debtors will pay over $125 billion in annual interest carrying charges alone for just their single-year new purchases of homes and automobiles. The enormity of these amounts leads to a simple question:
Is it possible for borrowers to reduce their debt service costs? And if so, how?
The answer to the first question is certainly “yes.” The answer to the second question is…”that depends.” Since there are a number of techniques that can be used to reduce loan carrying costs, an individual needs to consider which method(s) is(are) best for him or her. This White Paper will discuss three self-help approaches that can be used to reduce the cost of almost any loan 1) simply, 2) without the borrower’s incurring any special ‘setup’ fees, and 3) without the need to consult a financial advisor or seek an advanced degree. The three methods are the accelerated payment (or extra princ