Financing: The Good, The Bad and The Ugly
WHAT TYPE OF FINANCING IS RIGHT FOR YOU?
People get financing for all different reasons: to make a major purchase like a home or car, buy big-ticket items like furniture and TVs, make home improvements or repairs, pay for college or medical bills… the list goes on and on.
Financing fast facts:
- Always find out the APR and your minimum monthly payment
- Check your credit score, correct any errors and pay down debt before applying
- Shop around for the lowest APR
- Stick to reputable lenders and retailers
Most will finance an item at least once in their lives
The two main types of financing are secured and unsecured. Secured financing relies on an asset that the seller can collect to cover the contract, if unpaid. Car financing and mortgages are two common types of secured financing. For example, if you don’t pay your mortgage, the bank could take the house.
Unsecured financing, such as a payday loan or revolving line of credit, doesn’t require any collateral and is therefore more difficult to get than secured financing. Approval for these types of transactions often relies on your credit history and income.