FARMERS BRANCH, Texas (3/21/13)--Demand for affordable loans likely will rise because most Texans won't be tapping their savings accounts to facilitate big purchases, according to a poll conducted by the Texas Credit Union League.
The poll indicated 13.5% of Texans surveyed intend to buy a car this year, and 12.2% plan to purchase a house. Roughly 65.8% of Texans don't plan to purchase a car this year, and another 20% are undecided. Also, 87.8% said they won't buy a home (LoneStar Leaguer March 20).
Many consumers make the mistake of focusing exclusively on the interest rate of a loan, according to Courtney Moran, executive director of the Texas Credit Union Foundation.
"People need to consider the overall costs of the loan," she said. "Many times there is great variance in the cost of ancillary products like gap insurance and extended warranties. And sometimes dealers will aggressively sell things that people don't necessarily need or want."
Homebuyers need to ask questions regarding closing costs, discount points, and what prepaid items are required--such as prepaid insurance, Moran added.
"Often individuals focus on the monthly payment," she said. "Even though a monthly payment may be affordable, it's important to consider overall costs. Fixating on monthly payments is another common mistake, which results in paying much more over the life of the loan."
By paying their bills on time and checking their credit report often, people can protect their credit rating, Moran told the league. Zero-percent financing isn't always the best deal, she warned.
"If you can choose a rebate instead of the 0% financing, you may do better to forego the 0% financing and choose a low-interest loan elsewhere," added Moran. "It's simple arithmetic and will only take a few minutes to calculate which option is really the best deal."