An agreement where a creditor lends money to a borrower in exchange for a future repayment of the principal value and additional fees or interest.
Loans can be used to make large purchases, consolidate debt, handle emergency expenses, go abroad, pay tuition, and much more!
Interest rates are the amount a lender charges a borrower. They are generally a percentage of the principal (the amount lended).The interest rate on a loan is typically charged on an annual basis, known as an annual percentage rate (APR).
A loan’s interest rate is determined by several factors: credit score, loan type, interest rate type (fixed or adjustable), the overall state of the economy, and the loan amount.
Fun fact: GUASFCU’s free credit builder can help members raise their credit score, so they can receive a loan with a lower APR!
Credit unions, like GUASFCU, tend to have better loan rates than banks because they are non-profit organizations.GUASFCU benchmarks loan rates based on those offered by similarly sized credit unions. APR rates vary based on each loan and member.
Debt is an agreement where a borrower owes money to a creditor.
While you can use debt as a tool to build your wealth, interest rates on debt can ultimately cost you money. Debt can impact your credit score.
Credit Scores are determined by the following: Payment History (35%), Amount Owed (30%), Length of Credit History (15%), Credit Mix (10%), New Credit (10%)
Secured - Debt where you pledge your own assets as collateral
Unsecured - Debt where you do not have your own assets as collateral
Fixed - Debt in which you make long-term ongoing payments to pay it off
Revolving - Debt you can repeatedly withdraw from a credit line and pay back over time.
Deductible - Debt where you can claim a tax deduction
Non-Deductible - Debt where you can't claim a deduction
Credit Utilization Ratio (amount of credit used/ total credit card limit) - Best practice is to stay away from your limit, as the closer you get to your limit, the lower your credit score goes.
Debt to income ratio - As an adult, if yours is over 50% you should seek help externally. Anything above 43% is marked as a red flag to vendors.
Pay off private loans (bank loans) first, then work on federal loans.
Pay credit card bills on time.
28/36 rule - spend up to 28% of gross income on home related expenses and up to 36% of income on debt payments.
DISCLAIMERS
*Financial DisclaimerThe information provided on this page is for general informational purposes only. All information on the site is provided in good faith, however, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site.This site cannot and does not contain financial advice. The financial information is provided for general informational and educational purposes only and is not a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. The use or reliance of any information contained on this site is solely at your own risk. The information provided has not been reviewed, approved, or otherwise endorsed by any of the entities included within the post. We do not accept responsibility for any investment decisions made based on the information provided on this site.
*Investment DisclaimerInvestments are subject to market risks, including the loss of principal. The content on this site is not intended to be investment advice, and it should not be assumed that the investments recommended will be profitable or that they will not result in losses. Past performance is not a guarantee of future results. Consult your financial advisor before making any financial decisions.
