Borrow Money Wisely - Loan Basics

A loan is the gatekeeper to achieving some of the biggest goals we have in our lifetime, covering large purchases that people generally can’t afford to pay for upfront. They can provide access to possibilities like buying a home, starting a business or going to school.

Understanding the conditions of the loan, and how you will repay it, are two of the keys before you agree to a loan. The most important thing to remember is that taking out and repaying a loan is not intended to be a stressful experience. One way to help reduce stress is by doing some research.

You can start by brushing up on some basic loan terminology. Things like

•       Principle– the amount of money borrowed on loan. It can sometimes refer to the amount of debt, exclusive of interest, remaining on loan.
•       Interest– the amount charged by a lender to a borrower for the use of the money, often shown as an Annual Percentage Rate (APR). The ARP represents the yearly cost of the loan, including fees.
•       Term– the period in which you agree to pay back your loan.

You can learn more about the basics of a loan by watching the video below.

Comparing the hours, you are spending to the money you are earning is an incredibly helpful tool in determining whether an online pursuit is worth your time. Many rewards sites use point systems in which points need to be accumulated before they can be redeemed.

Before you meet with a loan officer, you should have a clear idea of how much you can comfortably afford to borrow. That means determining how your loan (or, more accurately, your loan payments) fit in with your overall budget. If you don't have a budget, now is a great time to make one, and you can get started by reading our article on the 50-30-20 proportional budget system.

Having your loan payment as part of your budget will give you a better send of what you can afford.

You can also research loans online to get an idea of interest rates for the products that interest you. Credit Unions are known for offering competitive rates on loans. You may also qualify for discounts or a better interest rate because you have other banking products with your credit union. Sunrise Credit Union's online loan calculator can be a useful tool in determining the affordability of a loan.

Once you've done your research and have a budget, then you can arrange to meet a loan officer. A loan officer has a comprehensive knowledge of lending products, banking industry rules and regulations, and the required documentation for obtaining a loan. They act as the liaison between the financial institution and the borrower and will try to find a loan arrangement that is in the best interests of both parties. You can request to meet with a Sunrise Credit Union loan officer through our online form.

Researching loan options play an important role in helping you find the right loan product. The process isn't easy, so taking your time and being thorough can save you years of financial stress. You should never feel pressured to sign anything on the spot. Remember, this is your loan and your future. You're in control!