You received a bill consolidation loan offer in the mail. 

Dear Larry Montgomery 

I’m delighted to inform you that you have been approved for a Homeowner Bill Consolidation Loan of up to $417,7000. at our lowest fixed rate of 6.00% (6.184% APR). You can use this money for anything you like; to pay off your high-interest debt, pay your urgent expenses. take a dream vacation, or whatever you want. There are no  restrictions!
And unlike the interest you pay on credit cards. auto loans and personal loans, the interest on your Homeowner Bill Consolidation Loan is usually fully tax-deductible.
For an example. with the following debt consolidate ion. a typical homeowner would save $1,224.88 per month!!

First Month’s Savings = $1,224.88
First Year’s Savings = $14.698.56
Potential 10-year Savings = $146,985.60
Plus, tax-deductibility actually makes your savings even greater!!
(a) Do OU agree with the savings claims by the loan company?

(b) Explain any illogical claims made by the loan company.

Transcribed Image Text:

Credit Card Auto Loan Home Improvement Loan Current Home Mortgage Total Current Debt New Homeowner's Bill Consolidation Loan Interest Rate 21% 8% 10% 8% 6% Monthly savings Outstanding Balance $12,000 $15,000 $23,000 $170,000 $220,000 $220,000 Monthly Payment $448.62 $359.20 $488.68 $1,247.40 $2,543.90 $1,319.02 $1,224.88