Loans, Credit & Debt at eMoneyStation.com
Few things in life are more important than "taking charge" of your personal finances. Don't let loans, credit and debt get out of control. All you need is a little help from the extensive resources of eMoneyStation to always head in the right financial direction. Learn More
Credit Cards
We sometimes love to hate them. But let's face it. Credit cards are a fact of life. Credit cards have become an essential part of our financial lifestyles and - when used properly - help us to proactively budget and better manage our finances as bills come along.
Credit cards are very useful and a good thing. If you do decide to get a credit card there are two important facts you should know before you select a credit card:
Interest: It's essential to know how much you're going to be charged by the credit card company to borrow money from them. The credit card company views how much you've charged to your card and then multiplies that by the interest rate. The important aspect of credit card interest is to find the card with the lowest possible fixed rate.
Interests fluctuate, depending on different factors. If you have a variable interest rate, your credit card lender could offer you a 9% rate when you apply, then possibly change it to 18% in two months. If you have a fixed rate, they can't. Also, don't be lured by the introductory rate offer. This means that you'll have a low for the first year, and then the company will increase the rate significantly. A reasonable interest rate is anywhere between 5 and 11%.
Balance: This is the amount of money that you have been charged on your credit card, plus any applicable finance charges (interest). The best plan is to only charge what you can afford to pay in full that month. If an unexpected expense arises, and you can't pay the balance in full, you need to pay the maximum amount you can afford without taking too much money away from your other expenses.
Home Loans
A home is usually the biggest investment a person makes. As a result, homework is important. You should be cautious, and evaluate all of the options available, before making a decision. When it comes to home loans, there are three situations that will drastically lower your rates:
- Your credit reports and credit scores are an important part of your home loan application. A mortgage lender will usually check all three of your credit scores and use the middle one to calculate your rates. A credit score over 650 will help you to get a good rate on your mortgage.
- Lenders also review your debt-to-income ratio to decide how much you can afford to borrow. To calculate this ratio, divide your monthly gross income by the amount you use to pay off debts each month.
- The down payment amount is the third key element the interest rate calculation process. It is calculated by reviewing your loan-to-value ratio. Lenders divide the amount you are seeking to borrow by the price of the home you want to buy.
Improvement in these three areas can help you save on your home loan. While shopping, keep this in mind: reducing your interest rate by just one percent can convert into thousands of dollars in savings over the life of the loan.
Auto Loans
Shopping for a car can be tiring and stressful, especially when considering all the factors that consumers must face. Remembering the following three tips will save you a lot of time and difficulty:
- You should review your credit before applying for an auto loan. All American consumers are entitled to a free credit report, so use this resource prudently. See if there is anything you should fix, since errors or could definitely affect your auto loan rate.
- Most borrowers select a low down payment because it's easier to manage. However, that choice increases the total cost of your auto loan, and usually leaves you owing more on the vehicle than it's worth for years to come. At signing time, place as much cash as you can.
- You should not bother getting your auto loan from the dealership. Instead, check with a credit union, bank, or online lender source. In most cases, your car dealer won't have the best auto loan.
By doing your research before stepping onto the lot, you'll know what is fair or not. This will give you some major bargaining clout.
