Christmas loans in the US: what are their advantages and disadvantages when buying gifts this season

Christmas loans in the US: what are their advantages and disadvantages when buying gifts this season

Afraid you won’t have enough money for the US holiday season? If so, Christmas loans could be the solution. However, they are not financial instruments to be taken lightly. At Globe Live Media we explain its advantages and disadvantages

The upcoming holiday season in America seems to be causing more headaches than anything else: At least 39% of Americans say they can’t afford to buy holiday gifts, according to a Credit Karma survey. If you are one of them, you have probably come across the offer of Christmas loans by private lenders, who have designed this type of financing precisely for consumers who need a little extra money to be able to afford the purchase of gifts.

According to NerdWallet, Christmas loans can be defined as unsecured personal financing that can cover the lack of money for expenses related to gifts, vacation trips or even parties. These loans typically range from $1,000 to $100,000, and have annual interest rates ranging from 6% to 36%.

One of the qualities of this type of loan (and that is extensible to all personal loans) is that they can be sources of fast money. In fact, some lenders can disburse the funds the same day you request them.

Loan terms are defined by several factors, which often include your credit history and income. Therefore, the better your credit score, your lender will probably offer you better interest rates or terms to pay the financing.

At Globe Live Media we explain the advantages and disadvantages that you must take into account when applying for a Christmas loan.

Advantages of applying for a Christmas loan in the US

1) Christmas loans are a good option to get money quickly and be able to fulfill your consumption agenda during the coming Christmas.

2) You can get Christmas loans from credit unions with very flexible and beneficial terms for you, with interest rates below 27%.

3) Not only banks and credit unions offer this type of financing, but you can also get it from private lenders in various parts of the US.

Disadvantages of applying for a Christmas loan in the US

1) Some lenders may impose additional fees such as an origination fee or a penalty for prepayment of financing.

2) If you don’t make your loan payments on time or go into default, this can negatively affect your credit score. Therefore, it is convenient that you evaluate the terms of payment and the contrasts with your monthly budget in an honest way.

3) Your financial situation could worsen due to the high interest on this type of loan.

4) Be careful, especially, with low-amount Christmas loans, as they may have interests similar to short-term loans, which are extremely dangerous for your personal finances because they have very high annual interest rates.

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