If you’ve been following the economic news in our country, you know that people are worried. You also know that banks are more and more hesitant to lend money, especially to those with shaky credit. If you’ve been one of the wise ones, however, who have kept your credit score high and paid your bills off on time, you will find little difficulty obtaining personal loans for just about anything you want, especially if you have collateral to offer.
Personal loans from a bank or credit union are often harder to get than in store financing. The reason is, quite simply, that the bank has no real vested interest in what kinds of products you buy, or from where. Their only concern is whether you will be able to promptly pay back everything you have borrowed, with the appropriate interest. The only thing personal loans take into consideration are your ability to repay the loan, your past credit history, and your collateral.
Because banks make it a bit harder to get a personal loan, the interest rates are usually somewhat less than in house financing. Whether you use a store credit card, finance through a company’s preferred lender, or take your loan directly from the company you are buying a product from, the interest rates need to be higher to offset the losses incurred from lending to riskier borrowers.
Of course, if you are able to get a personal loan, you will save money because you won’t be paying as much in interest. You’d be surprised how much difference even a fraction of a percent can make over the course of a year or two.
If you’re buying a used car, you can also save on peripheral costs. Instead of buying full coverage auto insurance, you can put PLPD on the car. If you’re really worried about replacing the car after an accident, put half of the difference between what you’re paying for PLPD and what you would pay for full coverage into a savings account, and before you know it, you’ll have enough money to pay for your next car outright.
Whatever you’re buying, though, personal loans are almost always less expensive than financing. You should run the numbers yourself, of course, because there are exceptions, but in most cases, your good credit will pay off for you if you take your loans directly through your bank or credit union.
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