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3 Good Reasons to Consider a Holiday Loan

The holidays are a time of joy, celebration, and cherishing moments with family. They provide us a time to reflect on the year gone by and to look forward to the new year ahead. They’re also a time to splurge on gifts.

Of course, in the lead-up to this holiday revelry, there are a lot of costs. We spend on presents, decorations, and buffet trays of food— just to name a few things. In the U.S., individuals will spend around $1,000 on average just on holiday-related expenses.

To cover these expenses, you may be considering a holiday loan.

At NJFCU, we pride ourselves in being the best credit union in New Jersey for our members—so if you’re wondering if a holiday loan is right for you this season, here are 3 reasons to consider.

1. Access to Fast Cash
A holiday loan is similar to other unsecured personal loans. Unsecured simply means a loan that is granted without you needing to provide collateral. Without collateral, we look at a few factors to determine whether you’re eligible for a holiday loan including:

• The amount of the loan
• Your credit score
• Your debt-to-income ratio

If you’re approved for a holiday loan, you’ll get access to the cash you need to enjoy the holidays your way, with plenty of time to pay for them.

2. Better Interest Rates than Credit Cards
If your holiday budget turns out to be short of what you need, you may assume the easiest course of action is to put the difference on your credit cards. If you’re only going to spend slightly over, this isn’t a problem. However, once the figures grow, you’ll want to consider other options.

The issue with credit cards is that they have variable APR—and it’s always high.

That means you’ll end up paying more interest on the debt you accrue with your credit card. A holiday loan, on the other hand, can come with fixed rates lower than the rate of your card. This means you’ll pay less in the long run by opting for a loan.

3. Holiday Loans May Improve Your Credit Score
FICO credit scores consider various metrics from your credit usage and payment history to the mixture of credit accounts you have open and more. Five different factors all wrap up into a neat little number between 300 and 850. Because of these factors, adding a holiday loan to your portfolio can increase your credit score. Here’s how:

• Credit mix – By adding a holiday loan, you will be adding to your credit mix, which can help boost your overall score.

• Payment history – Assuming your holiday loan is something you can easily pay off after the season is over, you’ll be showing that you are loanworthy by making your payments on time. This can be a major factor in increasing your credit score.

• Credit usage – As you pay down your loan, your credit usage percentage will go down, leaving you with a higher score.

Of course, taking out a holiday loan doesn’t guarantee your score will go up. Since it will be new credit and will be adding to your debt, you may see a short-term drop in your score. And, if you do miss payments, that will negatively affect your score. But if you stay on top of repaying your loan, you should see improvement in the long term.

Cherish the Season with North Jersey Federal Credit Union
At North Jersey Federal Credit Union we want to provide you with the financial support you need during the holidays and throughout the rest of the year. Check out all our loan and mortgage options to see what’s right for you when you need cash. Or, better yet, come into one of our branches and talk to us in person.

Tis’ the season to be jolly—and we’re happy to help you feel the holiday spirit in a real way. When you need the best holiday loans or personal loans NJ can offer, we’re here for you.

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