Houston home journal. (Perry, Ga.) 1999-2006, July 11, 2003, Image 5

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Newspaper Page TextTHE HOUSTON HOME JOURNAL Consumer guru Clark Howard got it wrong Clark Howard, WSB Radio’s consumer guru, is without ques tion one of the most learned sources of consumer advice on the planet. Therefore I was quite surprised when he made a mqjor error a week or so ago in a discussion of interest calcula tions. The caller was refinancing his home to take advantage of the low interest rates available due to the glut of money at the top of the American food chain. “While I am at it,” he asked, “I wonder if I should go ahead and pay off my car note, which is at 8 percent APR? That way I’ll only have one payment.” Clark’s answer was puzzling. “That depends on whether interest in your car note is cal culated under the Rule of 78ths, or sum of the digits, method. If so, paying it off early would dou ble the interest rate because of the prepayment penalty.” If this conversation had taken place 35 years ago, before the advent of Truth in Lending, the answer might have been cor rect. But an 8 percent APR, cal culated under the rules of Truth OBITUARIES ESTHER D. MCRARY WARNER ROBINS - Esther D. Mcßary passed away Tuesday, July 8, 2003. Funeral services will be at 10 a.m. Friday (TODAY) in the All Saints Episcopal Church in Warner Robins. Entombment will follow in Parkway Memorial Gardens. Mcßary was born in Charleston, S.C., to the late J.J. and Laura Barfield Dunlop. She was a member of the All Saints Episcopal Church in Warner Robins and a former member of the sewing and book clubs in Asheville and Raleigh, N.C. Survivors include her daughter and son-in-law, Laura M. (Wilbur H.) Keck of Warner Robins; grandsons, John David Walker Jr. of Jacksonville, Fla. and Troop Sgt. Rob Roy Walker of Japan; three great-grandchildren and one great-great-grandchild. Memorial contributions may be made to Hospice of Houston County at 103 Westridge Drive, Warner Robins, GA 31088, or to the All Saints Episcopal Church Memorial Fund at 1708 Watson Blvd., Warner Robins, GA 31093. Heritage Memorial Funeral home has charge of arrangements. ANGEL LASHON TAYLOR UNADILLA - Graveside services for Angel Lashon Taylor, the infant daughter of Fairow Taylor 111 and Takia Taylor of North Carolina will be held at 2 p.m. Friday (TODAY) in the Evergreen Cemetery in Unadilla. The Rev. Gregory McClendon will officiate. Taylor died Sunday, July 6, 2003, in North Carolina. Survivors other than her parents include a brother, Anthony Rollie; grandparents, Barbara Howell, Grady Howell, Peggy Taylor and Fairow Taylor Jr.; great-grandparents, Angel R. Taylor, Ida Collins and Fairow Taylor Sr.; a host of aunts, uncles and other rel atives. The family may be contacted at 155 Barron St., Unadilla. Alvie Coes Funeral Home in Unadilla has charge of arrange ments. Authority considers hotel near Agricenter By Emily Johnstone HHJ Associate Editor PERRY - Members of the Georgia Agricultural Exposition Authority were cautioned against jumping into building a lodging facility on the state owned Georgia National Fairgrounds and Agricenter property until they take a seri ous look at a number of vari ables including attracting new service-type businesses to the area. Dwight Jones of Ocmulgee Fields, a Macon company in the hotel/motel industry, spoke to the group Wednesday afternoon about the feasibility of locating a hotel on the Agricenter prop erty in the near future. Having lodging on the grounds was part of the master plan put together in the 1980 s for the Agricenter, pointed out Vice Chairman Foster Rhodes. Jones laid out several options dealing with dealing with differ ent franchises, size of the lodg ing facility and how to fund it. He told authority members they should look at how the lodging could attract travelers along Interstate 75 as well as those who are attending or par ticipating in Agricenter events. “I think you could do it now but I think you would struggle a few years,” he said. There should be more restau rants within walking distance of the Agricenter for one thing, Jones said. The location of the lodging facility on the grounds was also a topic, with Jones advising members that having it near the new Miller Murphy Howard convention center would proba bly be the best option. Rep. Larry Walker, a member of the Legislative Oversight *jj|i Sid Moore The Georgia Consumer attnys@bellsouth.net in Lending, will not change sub stantially through prepayment under the Rule of 78ths. There is virtually no penalty. Let’s assume you borrow SI,OOO for one year at 8 percent simple interest, to be repaid in a single payment at the end of the year. You will pay SBO interest, earned by the creditor at $6.67 per month. But let’s assume that you want to pay back the SI,OOO in monthly payments, and the creditor still wants to charge Committee for the Agricenter, questioned Jones about his thoughts on the Agricenter attracting more visitors in vari ous ways, such as constructing a sports complex nearby. Jones agreed that would help attract more people who would use a lodging facility at the Agricenter. Deciding what type of hotel to put on the grounds is impor tant, he added. He told the group he believes Macon’s present plans to put a Marriott next door to its Centreplex is “laughable.” The Authority agreed to con tinue researching the possibili ty of having a hotel on the facil ity in the future. LEGAL AD CITATION HOUSTON COUNTY PROBATE COURT RE: Petition of Victor and Tina DaSilva for appointment as Temporary Guardians of Ashley L. DaSilva, minor FIRST PUBLICATION DATE: July 3, 2003 TO: Unknown Father of Ashley L. DaSilva Objections to this petition must be in writing, setting forth the grounds of such objections, and filed with this Court no later than the close of business 14 days after this notice is mailed or 10 days after this notice is first published or served by the sheriff upon the recipient, whichever is later. WITNESS, the Honorable Janice D. Spires, Judge - Lisa E. Mitchell, Clerk 7-54 7/3 - 7/10 you SBO interest for the year. Is that an 8 percent APR? For the first month it is a true 8 percent, because you have the use of the entire SI,OOO. But after you make the first month ly payment, the principal goes down and you are still paying $6.67 on a smaller principal, which means a higher rate. By the time you get to the last month of the year you are pay ing $6.67 on roughly one twelfth as much money as you originally borrowed, and the effective rate is very much high er than 8 percent. That is what is known as an “add-on” rate ... a calculation that assumes, contrary to fact, that the original principal will be outstanding for the entire term. The nominal 8 percent rate is actually a 14.45 percent APR. But what happens if you pay the debt off early? Since the effective rate increases through out the term, the earlier you pay it off the lower the total APR you will pay. The Rule of 78ths was invent IT'S A GRAND OPENING! SATURDAY, JULY 12TH • 10 AM i A jflBT Lily of France X-Bras Sizes 32 - 38 you pay Orig ticket price *2B VFFO 1/2 oft price ‘l4 Vanity Fair Lounge Pants Sizes S - XL. Ladies cotton lounge pants. k 2 f ° r^ls Offer valid in multiples of two only. Orig. ticket price *2O. VFFO 1/2 oft price ‘lO Jan Sport & Eastpak Backpacks you pay Selected styles. Orig ticket price ’l6- s 4O VFFO's 1 /2 off price >8 ’2O Balloon Animals Face Painting ACTORY y Outlet 1/2 Off The Lowest Ticketed Price LOCAL ed by creditors to be sure that whenever you paid the debt off the creditor would still get the APR the creditor originally con templated ... in this case, the 14.45 percent instead of some lower figure. This is done by a formula that distributes the SBO interest pro portionately to the outstanding principal throughout the term. Since there are twelve months in a year, the creditor uses the sum of the numbers one through 12 (78) as the common denominator. He then assigns 12/78 of the interest to the first month, 11/78 to the second month, 10/78 to the third month and so on until the last month gets only 1/78 of the interest. The total is, of course, 78/78, or all of the interest. To figure up how much of the interest should be rebated if the debt is paid off early, the credi tor simply adds up the fractions for the remaining months at the time of prepayment. For exam ple, with six months remaining in the 12-month term, the total would be 6+5+4+3+2 +l, or 21/78ths. This means that at Peach Outlet Shops • 1-75, Exit 149 • Byron, GA • (478) 956-3275 Mon-Sat 10-9, Sun 12-6 • Visa/MC/Discover/Novus/AmEx Bestform Sport Bras Several styles and colors. Sizes 34 - 46 y°a 9 pay Orig. ticket price 1 5” - '9” Lee & Wrangler Misses' Capris Selected styles. you pay MM Orig. ticket price VFFO's 1/2 off price ’lO-’lB Lee & Wrangler Misses' Shorts you 3^3 pay Selected styles. Orig. ticket price ’26-’32 VFFO's 1/2 off price ‘13*16 Niagic Shows Ipm • ?P m * 2.4Spni Featuring Hike Nlagirian the halfway point of the one year loan, the creditor has earned 57/78ths of the pre-com puted interest, and only has to refund 21/78ths. The formula works just as well for shorter or longer terms, except that the common denom inator must be adjusted accord ingly. Back before Truth in Lending, a creditor computing interest in this manner might have told the consumer that he was being charged “8 percent,” when he was actually being charged an effective rate of 14.45. But since Truth in Lending became effective in 1968, the creditor has had to be honest about the effective rate, at least in consumer transac tions. The APR (annual per centage rate) under Truth in Lending is disclosed as 14.45 percent, and a prepayment under the Rule of 78ths pretty closely tracks that APR, regard less of the date of payoff. The practice of computing interest at an add-on rate and using the Rule of 78ths to adjust the pre-computed interest in FRIDAY, JULY 11, 2003 ♦ case of prepayment has largely been discontinued, due to the fact that computers can easily keep track of interest as it is actually earned. Most car notes today are calculated on a simple interest basis, with interest fig ured as payments are actually made. So there is no need to be afraid of a large prepayment penalty on the car note if you want to pay it off when you refi nance the house. In fact, it may be a very good idea, so long as you do not succumb to the temptation to extend the num ber of years in your home loan and stay in debt that much longer. Sid Moore is a founding mem ber of the National Association of Consumer Advocates, and was previously the litigation coordinator for the National Consumer Law Center and Consumers’ Utility Counsel for the State of Georgia. He is an attorney who has lectured on consumer advocacy in nearly 30 states. His column appears Fridays. Vanity Fair Bras Assortea styles and colors. m Red Tag and box bras not included. Orig. ticket price *lB *29. 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