Where To Shop For Credit
It is important to shop for credit just like you shop for new clothes or a new car. You need to compare the cost of different companies’ credit transactions the same as you would compare the cost of a new car.
If you are making a purchase on credit, shop different merchants not only for the best buy for the product but also the best buy for your credit transaction. If you are planning on taking out a loan, shop around to the different types of financial institutions such as banks, credit unions, savings and loans as well as finance companies to fine the lowest finance charges for your particular needs.
Credit unions make loans available to members only. You can join a credit union that offers membership to qualified employees. If your mother or father is a member of a credit union, you can probably also join. You must have funds in the credit union to become a member. Credit union loans are usually closed-end loans; payments are deducted from the employee’s pay. Credit unions usually offer loans at rates below maximum rates allowed under state laws.
State and National Banks, State and National Savings and Loan Associations and Banks
Banks and Savings and loan associations make all types of loans, secured and unsecured at rates usually below maximum rates allowed under state laws. If you have a checking or savings account at a bank, they would be a good source of credit. Borrowers may have to pledge their savings accounts as security on loans.
Finance or Loan Companies
Finance or loan companies usually make larger loans, secured by autos, luxury goods, or real estate. Most of these companies will impose the maximum rates allowed by state statutes.
Creditors who finance their own purchases such as “Buy-Here-Pay-Here” used auto and furniture dealers. These types of credit are closed-end. Department and Jewelry stores who have their own charge accounts also known as revolving charge account. These accounts are open-end credit. The present rate imposed by most of these creditors is 21% Annual Percentage Rate.
ONCE CREDIT IS GRANTED, THIS IS THE BEGINNING OF YOUR CREDIT RECORD, WHICH WILL FORM THE BASIS FOR FUTURE CREDIT.