Help please. Suppose you borrow $10,000 at 10% P.A. and the payments get too much to handle, so you borrow Another 10,000 at 3% to pay off the first amount which was at 10%. Somehow this sounds like a Ponzi scam, but I can't seem to prove it. Does the above make sense, borrow more to of a big debt. My son did hat and is now over his head..help..
If you repay first $10,000, you will need to repay 1000$more of the interest. Now you need to repay 10,000 at 3% and 1000 of the first debt interest: 10,000 + 300 + 1000 = 11,300. It is the sum of 10,000 with 13% of interest. So, you get the larger debt, than before. Theabove doesn't make sense, if you borrow more, you get a bigger debt.