Page 58 - Credit Builidng Toolkit By Adrean Yancy jr 3
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Credit Building Toolkit
1. The Terms of Loan: What are the loan 5. Total Cost: How much will it cost you
terms for this credit card or installment to borrow money from an installment
loan? This is important because you loan? The total cost is a combination of
want to ensure that your repayment your monthly payment, how long it
schedule doesn't conflict with other takes to repay the loan, plus the interest
financial commitments (like when your charges.
next car, home, or education expenses
may be due).
6. The Repayment Plan: How does the
loan allow you to repay it? You may not
2. Cost: The cost of the loans is one of be able to keep up with your payments if
the most important things to consider the terms of payment are hard to deal
before choosing, and not just what you'll with, so make sure you find an option
be paying in interest rates for a year or that is clear, easy to understand, and
more. Consider also how much money feasible for you.
will be taken out on an installment basis
each month? How many months will it
take until your debt is paid off? 7. Interest Rate: What are the interest
rates for both types of loans (installment
and revolving)? You want to choose a
3. The Number of Payments: How many loan with the lowest rate possible.
monthly installments will you need to
make to pay off your loan? The more,
the better because less money is being 8. Loan Types: Do they need a secured
paid each month, and it would be easier loan or an unsecured loan? What is their
on your budget. credit score like? It is best you start with
a secured card, then transition to an
unsecured one after some time.
4. Credit Score: Your credit score will
affect what choices are available to you
when the time comes to borrow money
on an installment basis, so if your credit
score is subprime, be ready to pay a high
interest fee.
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