For 90 years American General has been the name that is associated with consumer finance loans. While American General does more than just simple loans, that has become their specialty. Now with the sale of the unit by AIG to Fortress Investment Group, it is expected that more could change.
American General Finance served a major role in providing financial services to those who were all but forgotten by the big banks. While consumers with substandard credit scores struggled to obtain loans through traditional avenues, consumer finance companies specialized in underwriting loans to those who posed higher default risks.
Springleaf Financial Services is for now just a name change. They still offer the same secured and unsecured loan products as before. You can expect though that the new owners will want to make some changes to put their own touch on things. However, those changes are unlikely to occur any time soon. Instead, they will want to maintain stability in the operation so that customers have time to warm to the new name.
What Springleaf does is to provide loan options to those who might not otherwise be able to borrow money for a car, home maintenance projects or other debts. They charge higher rates than banks typically do to compensate for higher rates of default.
As a consumer, sometimes it is necessary to obtain a loan with a higher interest rate if that is all that you can be approved for. It takes additional discipline to repay a higher rate loan because of the higher monthly payments, longer term and less visible payoff each month. If you complete the repayment as agreed, you can generally expect your credit scores to increase, thereby giving you access to lower interest loans in the future.
Consumer finance loans can help you increase your credit scores when you are lacking installment credit. Of course, you must be careful not to rely too heavily on these loans, since having too many consumer finance loans can actually lower your credit scores.
It is true that traditional credit options available through banks and credit unions have lower average interest rates and provide a higher credit boost than consumer finance loans. However, finance companies like Springleaf Financial Services will always be a better option than other fringe banking options, such as payday lenders and loan sharks.
AIG is not completely out of the picture. They have retained a 20% stake in the company which they hope will offset some of the losses they took as a result of the economic downturn.
Related article:
What Interest Rate Does Springleaf Financial Charge?
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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