DEBT – Manvinder, Jovan, Herveen, Navleen, Gurjivan, Avneet

What do students need to learn about DEBT?

https://www.debt.org/credit/loans/

Auto Loans

What is it?-An auto loan helps you buy a car that costs more than you can afford with cash. Unless you have a substantial amount in savings, you’ll probably borrow and pay off your vehicle with flat monthly payments.

How much interest? Most car loans use simple interest, a type of interest of which the interest charge is calculated only on the principal (the amount owed on the loan). Simple interest does not compound on interest, which generally saves a borrower money. Borrowers have a choice of fixed or variable interest rates. A deposit can be used (either cash or trade in) which reduces the size of the loan needed. A tax deduction may be applicable if the vehicle is to be used for business purposes. Lower interest rates are available as the loan is secured against the car.Let’s say you take out a car loan for $12,000 to be paid back over five years (or 60 months) at an interest rate of 10%. Your monthly payments for this loan would be $254.96.

How  can you pay it off?- Pay half your monthly payment every two weeks. Round up.Make one large extra payment per year. Make at least one large payment over the term of the loan. Never skip payments.Refinance your loan.

Student Loans

What is it? Student loans are offered to college students or university students and their families so they can cover the cost of higher education. There are two main types of loans, federal and private. Federal loans are typically considered better because of their lower interest rates and better repayment terms.

 

Personal Loans

What is it?Personal loans can be used for any personal expenses and don’t have a designated purpose. This makes them an attractive option for people with outstanding debts, such as credit card debt, who want to reduce their interest rates by transferring balances. Like other loans, personal loan terms depend on your credit history. A personal loan is typically issued for a specific amount and can be used for various purposes at the discretion of the borrower. This kind of loan is used for everything from funding an education or financing a new business venture to purchasing luxury items or taking a lavish vacation.A personal loan can be a secured loan or an unsecured loan. A secured loan uses an asset — such as a house or car — as collateral (or support). If the borrower defaults on the loan, the creditor can take the asset. An unsecured loan does not require collateral, so it is considered high risk for the lender. As such, it has a higher interest rate.Personal loans have evolved over the years to meet the changing needs of the consumer. It used to be nearly impossible to get a personal loan with a limited or bad credit history, but today there are loan options for people with bad credit and nearly every other type of consumer.

Benefits Of Choosing a Personal Loan

The major benefit of a personal loan is the name: It’s personal. You can use it for any reason you like and you don’t need collateral to get one.

The choices range from something practical like consolidating credit card debt or remodeling the bathroom to something whimsical like buying a boat or taking a European vacation. The choice is yours.Personal loans, especially unsecured ones, usually don’t require much more than filling out an application form and supplying documents that verify your financial standing. The money doesn’t have to come from a traditional source like banks or credit unions.Family and friends can be the source of money, though it is advisable to have a formal loan agreement with them to make sure the relationship doesn’t go sour. There also are a number of peer-to-peer online lending sources like Prosper and Lending Club, as well as sites like Kickstarter and IndieGoGo that cater to entrepreneurs. The online sites normally charge a fee, but if you need money and need it fast, this is one of the options available.

Loans for Veterans

What is it? A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). The loan may be issued by qualified lenders. The VA loan was designed to offer long-term financing to eligible American veterans.

How much interest? The VA interest rate lowers your interest rate by refinancing your existing VA home loan. By having a lower interest rate, your monthly mortgage payment should decrease.

How  can you pay it off? –There’s no mortgage insurance with VA loans, but there is the VA Funding Fee. This fee (usually about 2 percent of the loan amount) helps the VA keep the program going and is required on both purchase and refinance loans. It can be rolled into the loan amount and waived entirely for those with service-connected disabilities.

Small Business Loans

What is it?Small business loans are granted to entrepreneurs and aspiring entrepreneurs to help them start or expand a business. The best source of small business loans is the U.S. Small Business Administration (SBA), which offers a variety of options depending on each business’s needs.

How much interest?

How  can you pay it off?- The first step when trying to get out of debt is to stop creating more debt. This is probably the hardest step as you have more than likely been spending money you don’t have for a while and it will take some time to determine what you can and cannot afford.

Payday Loans

What is it? Payday loans are short-term, high-interest loans designed to bridge the gap from one paycheck to the next, used predominantly by repeat borrowers living paycheck to paycheck. The government strongly discourages consumers from taking out payday loans because of their high costs and interest rates.

How much interest? 3,724% annually and $17 per $100 in B.C.

How can you pay it off

Home Equity Loans

What is it? If you have equity in your home – the house is worth more than you owe on it – you can use that equity to help pay for big projects. Home equity loans are good for renovating the house, consolidating credit card debt, paying off student loans and many other worthwhile projects.

Home equity loans and home equity lines of credit (HELOCs) use the borrower’s home as a source of collateral so interest rates are considerably lower than credit cards. The major difference between the two is that a home equity loan has a fixed interest rate and regular monthly payments are expected, while a HELOC has variable rates and offers a flexible payment schedule. Home equity loans and HELOCs are used for things like home renovations, credit card debt consolidation, major medical bills, education expenses and retirement income supplements. They must be repaid in full if the home is sold.

Interest Rate:  In mid-January 2016, the national average interest rate for a $30,000 fixed-interest home equity loan was hovering a bit over 5%. The average interest rate for a $30,000 HELOC was about 5.2%.

How to pay? Talk to your lender about setting up automatic monthly payments that cover the interest and principal, so that you’ll have your line of credit paid down over a specified period of time. Set up automatic payments that cover more than just the interest with internet or online banking services yourself.

Mortgages

the charging of property by a debtor to a creditor as security for a debt (especially one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.

If you have a bad credit it is harder for your mortgage to pass. There is a certain interest that you have to pay when taking the loan.

Mortgages are loans distributed by banks to allow consumers to buy homes they can’t pay for upfront. A mortgage is tied to your home, meaning you risk foreclosure if you fall behind on payments. Mortgages have among the lowest interest rates of all loans.

Debt(definition)-Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

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