A North Bay woman who helps people get car loans is applauding the move to introduce financial literacy to Grade 10 students. The provincial government intends to introduce the program in high schools next September. Tania Madigan says having good credit is important because it results in lower interest rates. Madigan says when young people hit 18 and 19 years of age, credit card companies are lining up to give them credit. The problem for young people is being late with payments when the balance is due. Madigan works at Lakeshore Motors and regularly sees people in their early to mid-20s trying to buy a car. “But they have terrible credit,” she says. “And it’s all because they missed a payment on their credit card.”
One goal of the financial literacy program is to teach Grade 10 students about the importance of credit cards and the need to pay off the balance as soon as possible and not miss any payments. Madigan says when people start missing payments, they end up with bad credit meaning they’re hit with very high interest rates when applying for a loan. The example she uses is a person trying to finance a $10,000 car at 4 percent interest. She says that person is looking at roughly $220 a month in payments. “Now the person that has bad credit could face interest rates as high as 29 percent,” Madigan says. “For this person the monthly payments would be just under $500 a month. It means you’ll have paid $10,000 in interest over the course of the loan. So you bought the car twice because you were late with your credit card payments.”
On Thursday, we’ll feature the second part of this story.
