Houston TX
Fair To Bad Credit Loans

Bad Credit Loan Example In Houston TX

Raymond purchased new appliances and furniture for his home from one of the big box stores in the city to replace everything that was destroyed in the recent floods.

He was able to get a great deal and saved over $2000 on the total purchase by taking out a store credit card. They offered this deal to sign up a new customer to the store credit plans they offer.

What he did not realize at the time was that the interest rate on any balance he carries on the new store credit card will be as high as 29%.

This is pretty typical of many store based credit cards. They offer a great deal on the initial purchase as long as you charge the entire purchase to this credit card.

The store is hoping that you will also not be able to pay the entire balance when the statement arrives. If you carry any balance past the due date the 29% interest is charged on this balance.

This approach also applies to deals such as no payments for 6 months etc. Once the six months if over, if you do not pay the entire amount in full before the due date interest is charged from the initial date. A hefty interest charge that takes many people by surprise.

Raymond wanted to borrow $5000 as a personal loan to avoid paying these high interest charges.

A $5000 personal loan with a five-year term and 7.5% interest rate for Raymond cost him the following per month:

• Loan Amount (principal) = $5000
• Interest Rate = 7.5%
• Term Length = 5 year
• Monthly Payment = $100.09
• Total Paid Back = $6011.38
• Total Interest = $1011.38

At $100.09 a month this personal loan was quite affordable for Raymond and he only will pay a total of $1011.38 in interest if he takes the full five years to repay this loan.

He saved $2000 by taking the store credit card, so his net savings after this loan is $988.62, which is still a good deal for him. Raymond plans to repay the loan much more quickly than the full 5 years, saving even more money.

By comparison, if Raymond stayed with the store credit card, his monthly payment would have been $158.71 and the total cost of the loan would have been $4522.56 over five years. This is a huge interest cost and Raymond would not have saved any money on his purchase.

Raymond obviously made the right decision to apply for a personal loan and pay off his store credit card. He is busy repaying this loan and fully expects to repay the loan in less than three years.

He is working full time helping with the reconstruction work after the floods. He is enjoying his new furniture and has also recently completed repairs to his home.

Although his home was flooded, it did not suffer wind damage. All of the furniture needed to be replaced along with flooring and the first two feet of drywall to avoid mold and other contamination. This $5000 personal loan really helped him settle into his home and saved him a lot of money at the same time.

If you live in Houston TX and you need a loan regardless of a bad credit rating we hope our website helps you in some way.

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