Borrowing for dummies

Amortization Schedule.

This helps you pay off debts overtime in an equal installment. It helps you keep track of the payments you are making each month and help estimate when something will be paid off.
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Tips on borrowing:

  • workout your budget
  • DO NOT borrow from loan sharks
  • when borrowing make sure you can ensure monthly payments
  • think carefully about how much you are borrowing

Myths on borrowing:

  • you get a universal credit score
  • debts are not important
  • living with someone will impact your credit score
  • too much credit is fine

Credit

  1. Introductory APR vs. APR

introductory APR is short term and is usually low or 0% interest rate, where APR is taking out a cash advance using a credit card.

2. Truth in Lending Act

this is a federal law that requires to tell you about the costs, terms, and conditions at the time they offer you a loan or credit card.

3. Interest Rate

this is when you are being lent money by the bank and have to pay for borrowing.

Simple Interest & R-T-P

  • When you sign for simple interest loan no interest is added in advance.
  • you can pay off your entire loan early no penalty or pre-payment
  • there are no "late charges" if you are late with payment
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20-10:

this helps you understand how much credit you can afford. avoid borrowing more than 20 percent of your annual net income on all of your loans and payments on those loans shouldn't exceed 10 percent of your monthly net income.

5 C's

  1. Character: one who has a responsible attitude
  2. Capacity: ability to repay loans or make payments on merchandise
  3. Capital: property and other assets that total more than debts are known
  4. Conditions: factors that might affect a persons ability to desire or meet financial obligations
  5. Collateral: property or possessions that can be mortgaged or used as security for payment of a debt

FRAUD!!!

Tips:

-check your credit history and score regularly

-pay bills electronically

-avoid sharing personal finance information

-what out for a "free trial" that considers credit card information

_dont feel obligated to give credit information over the phone