Final answer:
It is true that repayment plans offered by companies can extend debts over decades, particularly with mortgages and credit, leading to a much higher total repayment than the original loan amount. This can make it challenging for individuals to manage their long-term debts. Governments treat debt differently, more focused on keeping up with payments than on fully repaying the debt.
Step-by-step explanation:
The statement that many companies offer repayment plans that can extend debts over decades is true. For example, the terms of a mortgage can span 15 or 30 years, which means that the total amount repaid can significantly exceed the original loan amount due to interest. Considering a $1,000,000 loan with monthly payments of $5,995.51 over thirty years, one would end up paying more than $2.1 million. This shows how interest can more than double the cost of the original sum borrowed.
Similarly, just by making minimum payments on a $2,000 credit, it could take about 15 years to pay off, ultimately costing more than twice the borrowed amount in interest. These repayment plans allow for smaller monthly payments but significantly increase the total amount repaid over time, often creating challenges for individuals trying to manage their debt.
It is essential to note that while individuals usually aim to pay off their debts, governments operate differently. As illustrated by Germany's experience with WWI reparations, they maintain their ability to borrow primarily by keeping up with payments, regardless of whether the full debt is ever completely repaid. This underscores the distinction in debt management strategies between individuals and government entities.