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Introduction. Instructor and student introductions Module overview. Student Introductions. Your name Your expectations, questions, and concerns about loans. Purpose. Loan to Own provides general information on installment loans, including: Car loans Home equity loans. Objectives.

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Presentation Transcript
introduction
Introduction
  • Instructor and student introductions
  • Module overview

Loan To Own

student introductions
Student Introductions
  • Your name
  • Your expectations, questions, and concerns about loans

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purpose
Purpose

Loan to Own provides general information on installment loans, including:

  • Car loans
  • Home equity loans

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objectives
Objectives

By the end of this course, you will be able to:

  • Identify various types of installment loans.
  • Explain why installment loans cost less than rent-to-own services.
  • Identify the factors lenders use to make loan decisions.

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objectives continued
Objectives (Continued)
  • Identify the questions to ask when purchasing a car.
  • Describe the advantages and disadvantages of borrowing against a home.

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agenda and ground rules
Agenda and Ground Rules
  • 90 minutes long
  • One 10-minute break
  • Training methods
  • Class participation

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installment loans
Installment Loans

Installment loans are loans that are repaid in equal monthly payments, or installments, for a specific period of time, usually several years.

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types of installment loans
Types of Installment Loans
  • Secured loan
  • Unsecured loan

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secured loan
Secured Loan

A secured installment loan is one where the borrower:

  • Offers collateral for the loan.
  • Gives up his or her right to the collateral if the loan is not paid back as agreed.

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unsecured loan
Unsecured Loan

An unsecured loan is a loan that does not require collateral.

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cost of installment loans
Cost of Installment Loans
  • Annual percentage rate (APR)
  • Fixed rate loan
  • Variable rate loan
  • Finance charge

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car loans versus car leases
Car Loans versus Car Leases
  • Ownership potential
  • Wear and tear
  • Monthly payments
  • Mileage limitations
  • Auto insurance
  • Cost

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financing a car
Financing a Car

Getting a car loan = Financing a car

  • Use the loan to purchase a new or used car.
  • Car becomes collateral for the loan.
  • The lender holds the car title.
  • New car loans last 3 to 7 years; used car loans last 2 to 5 years.

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where to obtain a car loan
Where to Obtain a Car Loan
  • Banks
  • Credit unions
  • Thrifts
  • Finance companies
  • Car dealerships

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loan pre approval
Loan Pre-approval

The financial institution calculates how much money you can borrow to buy your car.

  • It is a free service.
  • It does not obligate you to accept a loan offer from the institution.

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when dealers offer low interest rates
When Dealers Offer Low Interest Rates

To get the lowest advertised rate, you might have to:

  • Make a large down payment.
  • Agree to a short loan term, usually 3 years or less.
  • Have an excellent credit history.
  • Pay a participation fee.

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participation fees
Participation Fees

Money that some dealer finance companies might charge to get a low interest rate.

Example:

To get a 2 percent APR, you pay a participation fee of $200.

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beware of dealer lender relationships
Beware of Dealer-Lender Relationships

When you ask for dealer financing, the dealer might call several lenders:

  • A dealer might pick the lender that makes the most profit for the dealership.
  • For referring you and other customers, the lender might pay money to the dealership.

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car title loans
Car Title Loans

Short-term (usually 1 month) loans that allow you to use your car as collateral to borrow money.

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home equity loans
Home Equity Loans

A loan that allows you to borrow against the “equity” in your home.

Equity = The value of the home minus the debt

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unsecured installment loans
Unsecured Installment Loans

Sometimes called personal or signature loans, these loans can be used for personal expenses such as:

  • Bill consolidation
  • Education expenses
  • Medical expenses

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benefits of unsecured installment loans
Benefits of Unsecured Installment Loans
  • Fast approval time
  • Interest rates lower than credit card rates

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the four cs of loan decision making
The Four Cs of Loan Decision-Making
  • Capacity
  • Capital
  • Character
  • Collateral

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