Consumer finance loans often 25-28% interest

Have you considered using a consumer finance company to provide a loan for your next move? If you are, you could be paying more than you realize.

Understand that most consumer finance company loans are in the 25-28% APR range. That means that even a loan as small as $2,000 will cost you over $900 in interest over the course of 3 years. $900 is probably close to the amount you would need for your security deposit.

What it means is that by relying on these expensive loans, you are spending future security deposits before you even get a chance to move. It perpetuates the cycle, where by relying on high-cost loans, you are unable to save money for future needs.

Consumer finance company loans typically charge at least 25% APR. Some states limit the interest that can be charged. Other states allow much higher interest rates plus a whole list of fees that many borrowers fail to understand.

Small consumer finance companies are often the worst to work with. Larger companies can be difficult to deal with as well, so focus more on the reviews of the company than its size.

OneMain Financial and Springleaf Financial are two of the leading finance companies. They are the newest version of what was previously known as CitiFinancial and American General Finance.

If you must rely on a loan, then these are certain less risky as payday loans, which should be avoided at all costs. You should realize though that relying too much on finance companies to meet your lending needs could cost you more than just high interest. You could also be penalized with a ding to your credit for having too many finance company loans in your credit history.

A better option than borrowing is to plan your actual move. Start putting aside $50 a month into savings. Make it an automatic process, where maybe you use a split direct deposit or by setting up an automatic transfer from your checking into savings. Your bank can even help you set it up. This can help you avoid taking out a loan to pay your rent or security deposit.

When you do decide to move, make sure that you clean your current residence thoroughly. Document what you have done to clean the place. Some maids even offer a “move-out” service for as little as $75-100. That might be worth it to ensure that you get your entire security deposit returned. Getting that back could give you what you need to maintain emergency savings as well as to use towards a future move.