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Take Action! Pre-qualifying for a Loan There may What Documentation is Financial

Pre-qualify for a loan – before you go to a dealership come a Required to Get a Loan? Literacy
No. 7
„ I can maintain a good credit rating to buy your car or meet with the real estate agent, time in Proof of Income
your life
by paying my bills consider having your loan set up and approved in „ Employer contact
advance. By having the work done in advance, you when you information
„ I will use my credit wisely and only know how much car or house you can afford and you want to
borrow what I can afford to pay can cut the paperwork and hassle to a minimum. make „ Copy of recent pay stubs
back. a major purchase and you will have to „ W-2 forms
Beware of Payday Loans borrow money to do this. Taking out a loan „ Copies of federal tax returns
is borrowing money and promising to pay it

Before You Take Out a Loan, „ These loans are usually for small amounts of back, meeting certain terms and conditions. Current Assets
A credit card is a short-term loan. A long
money ($500 or less) and can include an APR of
Remember: up to 400%. Regulations for payday loans vary term loan is designed for larger purchases or „ Recent bank statements
for checking and savings
„ The lending institution is looking for from state to state. expenses. Loans allow you to make gradual accounts
some type of collateral – they want to „ These loans are really just cash advances against payments on a large purchase. Buying a
make sure they can get their money the next paycheck you will receive from your car, a home, remodeling, starting a small Credit Report
back one way or another, whether it employer. Avoid this type of loan, as it can be very business, taking a vacation, or covering „ The lender will order a credit
unexpected medical bills are just some of the
is taking back the item, repossessing costly. reasons people seek a loan. report which lists your credit and Interest
the car, or declaring foreclosure on score and credit history. Loans
your home. Can I Get a Loan if I Don’t Have While loans can make dreams come true, The credit report shows
they can also be a potential disaster if you
„ You are more likely to qualify for a Good Credit? miss payments or fall behind. Mismanaged outstanding debt, payment
loan if you already have a relationship loans can lead to loss of the property, a lower history, and any issues that
with the lender. If you have a What if you don’t have a good credit rating, can credit rating, and exploding interest rates might cause you to have
checking account, and you have good you still get a loan? Yes, the terms may not be as and fees. Make sure you have a plan for problems repaying this debt.
history of maintaining your account, favorable as someone with a good credit rating would paying a loan back before you borrow money.
the lender will want to keep you as get. – Interest rates will be higher, the terms of the
a customer. It’s cheaper for them to loan might be longer, and you will end up paying
keep a customer than find new ones. more money over the life of the loan. Money Matters

Disclaimer: 8 When you take out a loan, you make a commitment to pay back
Learnovation, LLC’s mission is to empower people to the debt
improve awareness of their own financial situation.
®
©2016 Learnovation , LLC All Rights Reserved. This information is intended to serve as a general 8 You don’t own the item until the loan is paid off
www.learnovation.com guide of financial principles and strategies. It is not
intended to address individual financial issues, nor 8 A good credit history will help you get a better interest rate on a loan
should it be taken as legal, financial, or other advice.
8 Work to pay back the loan before it is due.