The Basics of Loans
Borrowing
You have big dreams that you want to accomplish in your life: moving out, buying a new car, or maybe even starting your own business. For many of us, a loan can help make these dreams a reality. Whether it’s a credit card or a mortgage, knowing the terminology and the different types of loans available can prepare you to find a loan that’s right for you. Let’s get started!
Q: What is a loan?
A: A loan is money that you borrow from the credit union in order to pay for expenses. Loans come in many different forms and sizes, including personal and commercial (business) loans.
Q: What should I consider before applying for a loan?
A: While there are many factors to consider before taking a loan, start by reviewing these three factors:
- Your credit score: where does your score fall?
- Your budget: can you afford to take out a loan right now?
- Interest rates: What are the interest rates for most loans right now? (Remember: this is the % that the lender charges you for borrowing money from them.)
A: Most loan applications will ask you to verify your identity and income to start, so be sure to have documents such as your ID, Social Security number, and paystubs on hand ahead of time. This will save you a lot of time in the application process.
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