I have to hand it to my credit union. Their marketing is pretty good! They advertised an unsecured loan special, good through today, at rates starting at 7.5% for up to 12 months for amounts between $500 and $2,500. It ends today presumably so that people can have the money in hand to shop Black Friday. The term is no more than 12 months so that it's a sure thing that it will be paid off before the holidays next year.
Everybody's looking for business — even banks and credit unions
Black Friday, the quasi-official start of the holiday shopping season, has taken on a life of its own the past few years with door-buster deals, super-early openings, lines around the building, hot chocolate for diehards, “leaked” circulars weeks prior, and much more. With the economy not really recovering with bells on, retailers are needing more than ever to capitalize on tradition.
The same is true for banks and credit unions. Despite all of the bad press that banks have gotten for raising their fees, loans are their bread and butter. And like retailers, they occasionally run promotions to encourage more business. (The rate I got on my used car loan was a promotional rate, and it's pretty hard to beat.)
Handle with care!
I'm not debt-free. I do have an auto loan out there now. Although I would have preferred to pay cash for the vehicle, we do plan to retire this auto loan ahead of schedule, and the total interest paid won't exceed 6% of the loan amount in any case. (Like I said, it was a great loan.) All in all, if we had to take out a loan, this was the best way to do it.
Borrowing money to spend on holiday presents is a bit different, though. It's so easy to overspend during the holidays, and it's tough to find things that don't depreciate heavily after you buy them (especially from retailers). So the $2,500 is gone, and then it's $217 per month for 12 months, and that lasts the whole year. (A lot of the presents bought with that money have probably worn out their welcome by March at the latest — maybe New Year's Eve?)
Everyone wants to sell you a bargain. It's certainly a good deal for the person selling you the bargain, especially this time of year.
It's up to you to determine whether the bargain is a good deal for you.
It sounds like you got a great deal on your car loan. Now, we had a car loan and then we bought one with cash. I would save and buy with cash again because with an older car your insurance is cheaper and while you will have to put some money into it, if it’s a good car and you do your homework beforehand, you won’t have to put that much into it. It can lead to saving a lot of money if you pay cash up front, I’ve found.