Question of the Day: How much will an Excellent credit score save you on a $25,000 auto loan?
Answer (from credit.org infographic): Over $10,000 ($10,896 to be exact)
- Methodology: Excellent credit score paid interest of $2,113 on a $25,000 auto loan while a Poor credit score paid interest of $13,009 on that same loan.
Thanks to NGPF Fellow, Diane Mondoro for highlighting this awesome infographic which is chock full of information. It does the best job I have ever seen at answering the question about the value of a good credit score by showing how interest rates vary by credit score but also by loan type too (including credit cards).
- Why do you think auto lenders charge higher interest rates on those with poor credit compared to those with excellent credit?
- When you borrow to buy a house that is called a mortgage. How much you can save on a $190,000 mortgage loan by having an Excellent credit score?
- What's the likelihood that you will be approved for a loan if you are in the Poor Credit category?
- Do you have to be wealthy to have a high credit score?
- Why do you think credit card rates are so much higher than mortgages or auto loans?
Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.
Sticking with the theme of credit scores, here's an NGPF activity that's a teacher favorite: CALCULATE: FICO Credit Scores!
NGPF has just started a new service: The Daily QuoD (that's Question of the Day in NGPF-speak!). Subscribe to our blog (right hand side of NGPF Blog homepage) and you will receive a new QuoD every weekday during the school ready to use in your classroom. Enjoy!
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
To get access to NGPF answer keys, assessments, and teacher-only resources: create a FREE Teacher Account