Financial Tips to Consider When Getting and Repaying a Loan

• Secured Loans (car & home) have lower rates because the car or home is used as collateral. Unsecured Loans (including credit cards) have higher rates due to more risk for the lender. When possible try to LIMIT Unsecured Loans.
• Applying for a Loan? Lenders will review your Debt to Income Ratio (All Monthly Debts ÷ Monthly Gross Income Before Taxes x 100 = %). Typically, lenders want your ratio BELOW 40%. But other factors such as loans with lower loan-to-values and those with excellent credit history will typically allow the lender to approve loans with higher debt to income ratios.
• Applying for a Loan? Lenders will review your Unsecured Debt Ratio (All Unsecured Debts ÷ Annual Income x 100 = %). Typically, lenders will typically want your ratio BELOW 25%. Unsecured Debts have no collateral, such as credit cards.  Higher ratios are allowed by some lenders if you have significant equity in your home or have a very strong credit score.
• A Loan is “Underwater” when the amount owed is MORE than what the collateral is worth. Example, you owe $25,000 on your car loan but the car is only worth $20,000. Avoid this by choosing shorter loan terms & not extending loan terms if refinancing.  
• Save Money & Pay Off Loans Faster by rounding up loan payments. If your payment is $207 / month, round it up to $225 or $250 to pay off the loan quicker. Lenders will typically apply the extra payment to your loan principal.
• Never-Ending Debt? Try paying off the smallest balances first. These small wins will give you a psychological boost and help you keep moving forward. Every payment is one step closer to being debt free!
• Auto, truck, boat, RV, motorcycle, personal and credit card loan payments are often your largest monthly expenses, excluding housing expense. However, they also offer the greatest opportunity to save money each month.  See if you could save big by switching your loans to the credit union.
• Lowering your loan payment(s) isn’t only about getting a better rate. By extending loan terms, changing the loan type or consolidating debt into a single, manageable payment you could save more each month.
• Avoid applying for multiple loans or credit cards within a short time period. Lenders may think you are in financial trouble or overextended and this may impact your loan approval, loan interest rate and credit score.
• Do you love playing Outdoors? You can get more than just great personal and auto loans at the Credit Union. Take advantage of low-rate loans on RVs, motorcycles, and boat loans for your next adventure.
• There are both short and long-term benefits to refinancing loans. Some strategies will give you more money upfront if you’re in need of immediate savings; others provide greater savings over the full life of your loan.
• Schedule a Loan Review with a Loan Specialist today. Loans make up some of your largest monthly expenses. They also provide a great opportunity to save. Find ways to consolidate debt or refinance loans to boost your savings.

5/18/22