Reporting Paula Ebben
BOSTON (CBS) – Think of big box retailers and things like cheap paper towels and large canisters of cereal come to mind.
Many of these retailers are now offering a broad range of financial services.
Lilly Newbauer had no idea she could refinance her home at one of these stores. “We were really surprised,” she said.
And the savings were significant. “The difference we’ve seen financially in our mortgage has been about $200 a month so that’s a big difference,” she says.
Tom Feltner of the Consumer Federation of America described the range of services now available: “Mortgages, home equity loans, home improvement loans, life insurance.”
Some stores are also offering home and auto insurance too.
Feltner believes these stores are filling a growing niche. “Consumers are drawn to the simplicity of a transaction that in previous products, there was much more of a barrier to entry.”
Sam’s Club has a small business program for customers who don’t qualify for a traditional bank loan. Spokesperson Catherine Corley said the average loan size is around $11,000.
Home Depot now allows customers to finance projects in the range of $40,000 as an alternative to a home equity line of credit.
Brandon Hayes said these Personal Project loans are often used for roofs and kitchen renovations.
It sounds like an easy way to get credit, but these types of financial products should be approached like any other large transaction.
Experts say consumers shouldn’t be coaxed by the convenience.
Added Feltner, “They’re targeting customers who are looking to complete a transaction very quickly, and at that point of sale, and I think in many ways that puts the onus on consumers to make sure they’re getting the best deal.”
Feltner says consumers should still shop around and comparison shop. That means reading all the terms and conditions of the loan. It is also important to compare premiums, interest rates, and closing costs.