3 Tricks Lenders Use to Take Your Money

There’s something you need to know. Something that will help you shift your mindset from consumerism to frugalism, and help stop you from getting tricked in financial matters.

Something that most people wouldn’t tell you. Lenders are NOT your friends.

No matter how friendly they seem. No matter how much they are willing to “work” for you. No matter how much they say they will make it “work for you.” Let’s take a closer look at 3 tricks lenders use to take your money to drive home our point.

Pa-lease. First, let’s look at the car scenario we used above. Let’s say you go to buy a car. You’re budget (what you can actually afford) is for a car around $15,000, so you go in looking for something in that range.

1. How Much Can You Afford a Month?

Before long, however, a salesperson has appeared and is slowly reeling you into a more expensive purchase because they can make your maximum payment allotment of $300 a month work. Alas, you fall for it and drive off the lot with a car for $25,000, almost double your budget!

Wanna know how they finagled the loan? Luckily, you have a fairly good credit score (let’s say 700), so the interest rate worked in your favor (3.58% APR). But, to get that payment down to $300 the loan term had to be stretched out to…

Let’s take the same example above, but with bad credit (550). With this credit score you can expect an interest rate somewhere around 14.95% (OUCH!). You buy the more expensive car at $25,000. You’re going to need the longest term loan at 96 months (8 years) to make it work.

2. Bad Credit, No Credit, No Problem!

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