Loan To Own 1. 2 Purpose Loan to Own provides general information on installment loans, including: Car loans Home equity loans

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  • Loan To Own 1
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  • 2 Purpose Loan to Own provides general information on installment loans, including: Car loans Home equity loans
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  • Loan To Own 3 Objectives By the end of this course, you will be able to: Identify various types of installment loans. Explain why installment loans cost less than rent-to-own services. Identify the factors lenders use to make loan decisions.
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  • Loan To Own 4 Objectives (Continued) Identify the questions to ask when purchasing a car. Describe the advantages and disadvantages of borrowing against a home.
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  • Loan To Own 5 Installment Loans Installment loans are loans that are repaid in equal monthly payments, or installments, for a specific period of time, usually several years.
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  • Loan To Own 6 Types of Installment Loans Secured loan Unsecured loan
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  • Loan To Own 7 Secured Loan A secured installment loan is one where the borrower: Offers collateral for the loan. Gives up his or her right to the collateral if the loan is not paid back as agreed.
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  • Loan To Own 8 Unsecured Loan An unsecured loan is a loan that does not require collateral.
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  • Loan To Own 9 Cost of Installment Loans Annual percentage rate (APR) Fixed rate loan Variable rate loan Finance charge
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  • Loan To Own 10 Car Loans versus Car Leases Ownership potential Wear and tear Monthly payments Mileage limitations Auto insurance Cost
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  • Loan To Own 11 Financing a Car Getting a car loan = Financing a car Use the loan to purchase a new or used car. Car becomes collateral for the loan. The lender holds the car title. New car loans last 3 to 7 years; used car loans last 2 to 5 years.
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  • Loan To Own 12 Where to Obtain a Car Loan Banks Credit unions Thrifts Finance companies Car dealerships
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  • Loan To Own 13 Loan Pre-approval The financial institution calculates how much money you can borrow to buy your car. It is a free service. It does not obligate you to accept a loan offer from the institution.
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  • Loan To Own 14 When Dealers Offer Low Interest Rates To get the lowest advertised rate, you might have to: Make a large down payment. Agree to a short loan term, usually 3 years or less. Have an excellent credit history. Pay a participation fee.
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  • Loan To Own 15 Participation Fees Money that some dealer finance companies might charge to get a low interest rate. Example: To get a 2 percent APR, you pay a participation fee of $200.
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  • Loan To Own 16 Beware of Dealer-Lender Relationships When you ask for dealer financing, the dealer might call several lenders: A dealer might pick the lender that makes the most profit for the dealership. For referring you and other customers, the lender might pay money to the dealership.
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  • Loan To Own 17 Car Title Loans Short-term (usually 1 month) loans that allow you to use your car as collateral to borrow money.
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  • Loan To Own 18 Home Equity Loans A loan that allows you to borrow against the equity in your home. Equity = The value of the home minus the debt
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  • Loan To Own 19 Unsecured Installment Loans Sometimes called personal or signature loans, these loans can be used for personal expenses such as: Bill consolidation Education expenses Medical expenses
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  • Loan To Own 20 Benefits of Unsecured Installment Loans Fast approval time Interest rates lower than credit card rates
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  • Loan To Own 21 The Four Cs of Loan Decision- Making Capacity Capital Character Collateral