Example: Sam and Chloe are getting married
Sam and Chloe are set to get married in a few months and they’ve organized everything from the venue to the dress. Unfortunately, Chloe has picked out a rather expensive bridesmaid dress, and realizes that she can’t expect her five bridesmaids to fully cover the cost of the $800.00 dress. Although they’ve already spent over $15,000.00 on their wedding day, Sam and Chloe agree to cover $500.00 from each of the five dresses, for a total of $$2,500.00.
Since they haven’t budgeted for this unexpected expense, Sam and Chloe will need to take out a loan. They head to their local bank but are rejected for a personal loan since both Sam and Chloe already have student loan debt. They decide to head online to compare personal loan providers and luckily come across a lender willing to allow them to borrow money – even though they already have debt. They’re approved for $2,500.00, which is to be paid back over one year – but due to their existing debt, they’re offered a higher interest rate of 15.00%.
| Cost of dresses | $2,500.00 |
| Loan type | Personal loan |
| Loan amount | $2,500.00 |
| Interest rate | 15.00% |
| Loan term | 1 year |
| Additional fees | Origination fee of 3% ($75.00) |
| Monthly payment | $225.65 |
| Total loan cost | $2,782.75 |
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.