if(ns4)_d.write("<\/scr"+"ipt>"); else _d.write("<\/scr"+"ipt>");

About Credit

    Have you ever loaned someone money? Did the person pay you back in a reasonable amount of time? If not, would you be willing to loan that person money again? These are the questions creditors ask every time you apply for a loan or a credit card.

    Credit is a privilege, not a right.

    Credit is a privilege, not a right. It allows you to borrow tomorrow's money to pay for something you get today. When you use credit to buy something, such as a car, what you're really doing is promising to repay a debt. Another way to look at it is that you're spending your future income now.

    Credit is extended several ways, including credit cards, personal loans, car loans and home mortgages. The terms of your debt repayment include interest. The interest on credit is usually expressed as an annual percentage rate (APR). The APR usually appears in the credit terms on the credit application and takes into consideration how long it will take you to pay back the loan. This rate can range from a few percentage points to well over 20%. The lower the interest rate, the less money you will spend repaying your debt.

    APR and Monthly Payments

    It's important to understand the difference between the APR and your monthly payment. Your monthly payment is composed of two things:

    1. A portion of the original amount of the loan.
    2. A portion of the APR.

    In other words, your monthly payment might be reasonable, but if the APR is very high, it will cost you more and take you longer to pay off the debt. Most loans are structured so that you pay off the interest first, then you pay off the principal or original debt. So, when the APR is high, your interest rate is likely to be high and there may be extra fees, all of which means you spend more time – and more money – paying off the debt. When comparing loans, be sure to look at the APR. The lower the rate, the better.

    Good credit terms and interest rates are earned. The best way to earn them is to have a stable income and show creditors that you are willing and able to repay borrowed funds as promised.

 

 Discussion Forum

Recent Posts -

Ads


Any Credit Welcome

Homeowners - get fast, easy & free online mortgage answers.
www.jc-capital.net


Fixed Rate Mortgage

Search MortgageSector for Low Rate Loans! Get Info & Apply online here.
www.mortgagesector.com


Interest Only

Compare offers on interest on adjustable mortgages. Get Started now!
www.rateadvisors.net

 


 


By visiting Allie Mae you have taken your first step toward becoming an educated borrower. Allie Mae is an objective, independent source of information for the mortgage consumer. Whether you are buying a home, refinancing, taking a home equity loan, building a home or in need of a mortgage for any purpose, Allie Mae is here to help. Allie Mae has helped thousands of people with their mortgage needs. We have a complete selection of articles, charts, calculators, and checklists designed to help you through the mortgage and home buying process.

© 2004 Copyright AllieMae. All Rights Reserved.
Privacy Policy   Legal  Terms & Conditions   Webmaster   Site Map    Application
About   Contact Us   Forum   Dictionary   Calculators   Articles   Free Content