Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay...
Transcript of Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay...
![Page 1: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/1.jpg)
BROUGHT TO YOU BY
LoanBASICS
![Page 2: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/2.jpg)
Loans are the gatekeepers to some of our biggest goals.
They help cover large purchases that people generally can’t afford upfront.
![Page 3: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/3.jpg)
MORTGAGES
LOANS
STUDENT LOANS
PERSONAL LOANS
SMALL BUSINESS LOANS
AUTO LOANS
![Page 4: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/4.jpg)
LoanTERMINOLOGY
![Page 5: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/5.jpg)
The amount of money borrowed on a loan.
(It can sometimes refer to the amount of debt, exclusive of interest, remaining on a loan.)
Principal Interest Term
$5,000 4.99% APR 48 months
![Page 6: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/6.jpg)
The amount of money borrowed on a loan.
(It can sometimes refer to the amount of debt, exclusive of interest, remaining on a loan.)
The amount charged by a lender to a borrower for the
use of the money.
(Often shown as an Annual Percentage Rate (APR). The
APR represents the yearly cost of the loan, including fees.)
Principal Term
$5,000 48 monthsInterest
4.99% APR
![Page 7: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/7.jpg)
The amount of money borrowed on a loan.
(It can sometimes refer to the amount of debt, exclusive of interest, remaining on a loan.)
The time period in which you agree to pay back
your loan.
The amount charged by a lender to a borrower for the
use of the money.
(Often shown as an Annual Percentage Rate (APR). The
APR represents the yearly cost of the loan, including fees.)
Principal
$5,000Term
48 monthsInterest
4.99% APR
![Page 8: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/8.jpg)
Secured vs. UnsecuredLOANS
![Page 9: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/9.jpg)
Loans can either be secured or unsecured, depending on whether or not they’re
protected by collateral.
![Page 10: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/10.jpg)
Property, vehicles and investments are all common
forms of collateral.
Collateral is something valuable that the lender can seize as a form of repayment if the borrower defaults on his or her loan.
![Page 11: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/11.jpg)
• Requires collateral• Tends to have lower interest• Usually longer term
• No collateral required
• Tends to have higher interest• Usually shorter term
SECURED LOAN UNSECURED LOAN
![Page 12: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/12.jpg)
Ways to lower your INTEREST RATE
![Page 13: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/13.jpg)
SECURE YOUR LOAN
Secured loans tend to have lower interest because they’re less risky to the lender.
CAR LOAN
![Page 14: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/14.jpg)
ONLY BORROW WHAT YOU NEED
The more you borrow and the longer the term, the higher the interest rate will be.
![Page 15: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/15.jpg)
BOOST YOUR CREDIT SCORE
Higher credit scores qualify you for lower rates on your loan.
![Page 16: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/16.jpg)
KNOW WHAT LENDERS LOOK FOR
Things like a solid employment history, no outstanding debt and a good relationship with your financial institution can all help.
![Page 17: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/17.jpg)
GET A CO-SIGNER
If you default on your loan, your co-signer takes on the debt as if it were their own.
![Page 18: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/18.jpg)
Fixed vs. VariableINTEREST RATES
![Page 19: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/19.jpg)
In a fixed-rate loan, the interest rate stays the same throughout the entire term of the loan.
![Page 20: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/20.jpg)
A variable-rate loan is based on a chosen index, so it changes throughout the term of your loan.
![Page 21: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/21.jpg)
The index is a benchmark that reflects changes in the national economy.
![Page 22: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/22.jpg)
If the index goes up, so does your rate.
![Page 23: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/23.jpg)
If the index goes down, so does your rate.
![Page 24: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/24.jpg)
Meanwhile, the fixed rate stays the same.
![Page 25: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/25.jpg)
• Stays the same throughout the entire term of the loan
• Tends to have higher interest to counter the effect of rates rising in the future
• Consistent and easier to budget for
FIXED RATE
![Page 26: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/26.jpg)
• Changes over time and is based on a chosen index
• Tends to have lower interest since the index is likely to go up over time
• Unpredictable and harder to budget for
VARIABLE RATE
![Page 27: Loan Basics | Ent Credit Union · remaining on a loan.) The time period in which you agree to pay back your loan. The amount charged by a lender to a borrower for the use of the money.](https://reader036.fdocuments.net/reader036/viewer/2022081523/5fca77e9af0b3c7f557b30c1/html5/thumbnails/27.jpg)
Sources: Investopedia, Wise Bread
It’s a Money Thing is a registered trademark of Currency Marketing
BROUGHT TO YOU BY