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Here's the Farm Loan Plan Laura E. Wilder, Secretary-Treasurer, Mansfield National Farm Loan Association, Mansfield, Mo.
Members of the Missouri Ruralist family have shown a lot of interest in the farm loan plan as advocated by A.A. Jeffrey in a short article published recently. One of the most comprehensive articles regarding the farm loan association work that we have seen has been prepared by Mrs. A.J. Wilder of the Missouri Ruralist staff for distribution in Wright county. Study the plane here, then get busy and organize an association in your county if your have none there. Making a Loan With the Farm Loan Association—Rate of Interest, 5 ½ Per Cent; $1,000 Loan Expense of making loan: Membership fee, $10: 1 per cent on loan, $10; examining title, $5.25. Total….........$27.25 Investment in association shares, $50. The association lends only to its members, who must buy one share of stock at $5 for every $100 borrowed. Interest at 5 ½ per cent on $1,000 and the payment on principal is $65 a year, to be paid in two payments of $32.50 each. This will amount in 5 years to…..$325.00 And at the end of 5 years you will still owe only………….$943.34 Whenever the loan is paid, the $50 you invested in association shares will be returned to you; so if the loan is paid at the end of 5 years it will take to finish paying the loan only………$893.34 If loan runs another 5 years, there is no expense for renewing, for it does not have to be renewed. Your payments during that time will amount to…..$325.00 And at the end of the 10-year period you will have paid in principal and interest and association fees….$675.25 And will still owe only………..$869.02 If you wish it to do so, your loan will run for the whole 34 ½ years with no expense for renewing and you are at all times sure that your interest rate will not be raised and that you will never be called upon for the amount of the principal. Your interest rates cannot be raised but, if the interest rates should go down, your rate will be lowered accordingly after the first 5 years. Your loan may be paid in full or in part at any interest paying time after the first 5 year period. Now compare this with making a loan in the old way.
Making a Loan in the Old Way—Rate of Interest, 8 Per Cent: $1,000 Loan Expense of making loan—a commission usually…$25.00 Interest on $1,000 at 8 per cent for 5 years………..$400.00 At the end of 5 years you have paid……………….$400.00 And still owe the full amount of the principal……..$1,000.00 If you wish to renew for another 5 years it will cost you another commission $25.00 Interest for the second 5 years will be……………...$400.00 And you will still owe the ………………………….$1,000 At the end of the 10-year period you will have paid in interest and commissions, including interest on first commission for 10 years and on second commission for 5 years at 8 per cent…………………………………………$880.00 And will still owe the full amount of the loan………$1,000 Making the total amount paid, if loan is paid at the end of 10 years….$1,880.00 Total paid Farm Loan Association if loan is paid at the end of 10 years is…$1,544.27 Making a difference in favor of the Farm Loan Association of……..$335.73 Or $33.57 a year. Can you make this money in any easier way than to save it?
With the Farm Loan Association, your debt is growing less every year, without any special effort, while in the old way you pay and pay and the debt remains the same, until you pay the full amount in a lump sum, and you have no assurance that your interest rate will not be raised or the principal called for. Laura E. Wilder, Secretary-Treasurer, Mansfield National Farm Loan Association, Mansfield, Mo.
Mrs. A.J. Wilder. "Here's the Farm Loan Plan." Missouri Ruralist (March 20, 1919): 11. CLICK HERE to see this article as it originally appeared in the Missouri Ruralist.
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