"Any society that would give up a little liberty to gain a little security will deserve neither and lose both." ~ Benjamin Franklin

On Loans and Life

>> Sunday, December 02, 2007

When I was younger as much less money savvy and I would find myself short of money I found it very easy to get loans.

This, of course, would ultimately lead me into more financial trouble as they were usually high interest "signature" loans. To this day I have no idea what I needed the money for, I am just very glad that I never defaulted on them.

As I got older and realized just how important my credit score was- ok, I should say 'when I learned what a credit score was'- I realized that personal loans came in many different forms and didn't all include hefty interest rates.

I also realized that if a loan were easy enough to get that I could walk in, sign a few papers, and walk out with a check that the company really expected me to pay it in the minuscule payments so they could rack up the interest.

I was lucky enough to get smart and clean up my credit before I really needed to study secured loans to buy my first home.

I found that the wrong kind of loan is very easy to get, while the right loan -when they actually make sure you won't default- is much more difficult to obtain.

I suppose that's kind of a metaphor for life- if it comes too easily there's gotta be a catch.

1 comments:

Iowa Bob 2:13 PM  

Jody:

Timely post, as I was just having a discussion with my 18 year old son and his friend about credit and responsibility.

When I was 20 I worked in a stero shop, and had the opportunity to by a top-of-the-line car stereo sytem for $300 from a factory rep. The problem is I didn't have $300 (which in 1980 was a heck of a lot of money) so I made a call to beneficial to see if I could get a loan. Since I needed to take advantage of the deal that day, I went over to their office on my lunch hour, got the check, and hurried back to work.

It was only after returning to work did I start reading the "small print" on my loan (this was in the days before "full disclosure" laws), and I discovered that after making the payments on my $300 loan I would in fact be paying more than $900 for the car stereo.

In one of those rare moments of common sense in my youth, I actually decided not to by the stereo, and returned after work to pay back my $300 loan. The four hours that I held the loan cost me $27 in interest, but the lesson I learned that day was worth much, much more.

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