Where can I get a loan?

If you have no or poor credit history then a consumer finance company may be the solution. Unlike banks and savings and loan associations, these finance companies do business by borrowing  money from other sources and then issue loans by using that money, out to the consumer. The difference between the interest rate that the finance company pays to borrow the money and the interest rate the company charges you, needs to be large enough for the finance company to profit, so the interest rate that finance companies charge is much higher than the rate that a bank charges. Consumer finance companies are also willing to approve smaller loans than other institutions.

If you are borrowing without collateral (security pledged for the payment of a loan), you pay a very high interest rate with a finance company. The company is taking on a greater risk with your loan and needs to build in provisions for collection costs if you default on the loan. If you can pledge collateral for the term of the loan, negotiate for a lower interest rate.

Before applying to a finance company, do your homework. Try to find something of yours that you can put up for collateral, and check your credit report for positive accumulated credit. If either of these options is available, apply for your loan at a bank or a savings and loan and discuss different options with them.

If you have a relative or friend who would co-sign or pledge collateral for you, try that avenue before committing to the high interest rates of a finance company.

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