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Credit

Credit. Buying a Car. A car loan is usually an installment loan with monthly payments. Make a down payment (cash deposit) toward purchase price. Can trade-in existing car as down payment. Consider a preapproved loan, dealer financing, or a lease. 8-2 Long-Term Debt Repayment.

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Credit

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  1. Credit

  2. Buying a Car A car loan is usually an installment loan with monthly payments. • Make a down payment (cash deposit) toward purchase price. • Can trade-in existing car as down payment. • Consider a preapproved loan, dealer financing, or a lease. 8-2 Long-Term Debt Repayment Slide 2

  3. Buying a House A mortgage is a long-term debt agreement used to purchase real estate. • A down payment of 10 to 20 percent of the purchase price is often required. • Property is used as collateral for the loan. • A conventional loan lasts up to 30 years. • An FHA loan is a government loan. • Closing costs are expenses paid to get a loan, such as appraisal fees and credit report fees. 8-2 Long-Term Debt Repayment Slide 3

  4. What Is a Debt Repayment Plan? A debt repayment plan is a strategy for paying off debt to reduce interest paid. 8-2 Long-Term Debt Repayment Slide 4

  5. Debt Repayment Plans • Student loans are deferred-payment loans; payment is postponed until your education is completed. • A shorter mortgage (15 yr. vs. 30 yr.) means less interest but higher monthly payments. • A rent-to-own agreement applies the monthly rent toward the purchase price of the property. 8-2 Long-Term Debt Repayment Slide 5

  6. Building Communications Skills • Formal Speaking • Begin with a clear statement of your goals. • Use an outline to develop the content. • Consider the audience. • Use slides to help illustrate points and add interest. • Practice the speech within the time limit. • Make eye contact and speak with confidence. 8-2 Long-Term Debt Repayment Slide 6

  7. How Can You Manage Credit Use? • Establish credit so it will be available in the future. • Pay bills on time to build a solid credit history. • Pay entire amount to avoid paying interest. • Establish a cash fund and have unused credit. 8-3 Credit Management Slide 7

  8. Study Credit Offers Compare disclosure terms. • Interest rates • Grace period • Annual fee • Minimum finance charge • Transaction fees • Cash advance fees • Late fees • Over-the-limit fees 8-3 Credit Management Slide 8

  9. Avoid Unnecessary Credit Costs • Keep the number of credit cards and accounts to a minimum. • Comparison shop for credit cards. • Consider special deals and financing. • Use credit to get sale prices. • Time your credit purchases. • Get cash rebates and rewards. • Pay bills on time or early. 8-3 Credit Management Slide 9

  10. Avoid Unethical Loan Practices • A loan shark offers illegal unsecured loans at high interest rates. • An advance-fee loan includes a large upfront fee. • Equity stripping involves giving a loan to a homeowner who cannot afford it, then taking possession of the home. 8-3 Credit Management Slide 10

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