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5 Types of Loans To Avoid With Howard Dayton
Episode 219
Howard Dayton is the founder of Compass— Finances God’s Way and the former host of this program.
0:55 - WHAT'S THE FIRST LOAN TYPE WE SHOULD AVOID?
Finance Company loans:
- High interest rates, large fees, and closing costs.
- Important to differentiate between interest rate and the APR, as the latter includes additional costs.
1:24 - AND THE SECOND?
Payday loans:
- Viewed as "legalized robbery."
- Typically have an APR of 390%.
- Creates a cycle of borrowing due to high interest rates, with borrowers often giving away their entire paycheck to cover the loan.
2:21 - WHAT'S THE THIRD LOAN TYPE?
Pawnshop loans:
- Short-term loans based on an item's value which is lost if the loan isn't repaid on time.
- Interest rates range from 5-25% per month.
- Many borrowers never reclaim their pawned items.
3:21 - AND THE FOURTH?
Auto title loans:
- 30-day loans using car titles as collateral.
- Risk of car repossession if payments aren't made on time.
- Referred to as "legalized auto theft" since you lose both the car and its equity regardless of loan size.
3:57 - WHAT'S THE FINAL LOAN TYPE TO AVOID?
Tax refund loans:
- People anticipate tax refunds in April but might take a loan if they're cash-strapped.
- Some tax preparers offer these loans without highlighting high interest rates that can be in the triple digits on an annual basis.
4:40 - DO YOU HAVE ANY TOOLS OR RESOURCES TO HELP PEOPLE NAVIGATE THEIR FINANCES BETTER?
A six-week video titled "Navigating Your Finances God's Way."
- Covers topics like debt, saving, generosity, investment, work, honesty, etc.
- Suitable for various settings: Sunday school, small groups, workshops, or individual study.
To learn more, go to navstudy.org. And you’ll find all Compass training materials at Compass1.org.
On today’s program, Rob also answers listener questions:
- Should I tithe before or after taxes?
- How can I invest for retirement while on SSDI and without earned income?
- Should I use my 401 K to pay off my variable rate home equity loan?
- Is the id.me login for IRS.gov legitimate, and should I switch from an I bond to a bank CD?
- How can I help a woman with recurrent ovarian cancer financially, especially when she's working in a low-paying job?
RESOURCES MENTIONED:
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network as well as American Family Radio. Visit our website at FaithFi.comwhere you can join the FaithFi Community, and give as we expand our outreach.
Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards
Published on 2 years, 2 months ago