Credit

Slide 2

Buying a Car

A car loan is usually an installment loan with monthly payments.

8-2 Long-Term Debt Repayment

• Make a down payment (cash deposit) toward purchase price.

• Can trade-in existing car as down payment.

• Consider a preapproved loan, dealer financing, or a lease.

Slide 3

Buying a House

8-2 Long-Term Debt Repayment

• A down payment of 10 to 20 percent of the purchase price is often required.

• Property is used as collateral for the loan.• A conventional loan lasts up to 30 years.• An FHA loan is a government loan.• Closing costs are expenses paid to get a loan,

such as appraisal fees and credit report fees.

A mortgage is a long-term debt agreement used to purchase real estate.

Slide 4

What Is a Debt Repayment Plan?

8-2 Long-Term Debt Repayment

A debt repayment plan is a strategy for paying off debt to reduce interest paid.

Slide 5

Debt Repayment Plans

8-2 Long-Term Debt Repayment

• Student loans are deferred-payment loans; payment is postponed until your education is completed.

• A shorter mortgage (15 yr. vs. 30 yr.) means less interest but higher monthly payments.

• A rent-to-own agreement applies the monthly rent toward the purchase price of the property.

Slide 6

Building Communications Skills

8-2 Long-Term Debt Repayment

Formal Speaking• Begin with a clear statement of your goals.• Use an outline to develop the content.• Consider the audience.• Use slides to help illustrate points and add

interest.• Practice the speech within the time limit.• Make eye contact and speak with

confidence.

Slide 7

How Can You Manage Credit Use?

• Pay bills on time to build a solid credit history.

• Pay entire amount to avoid paying interest.

• Establish a cash fund and have unused credit.

8-3 Credit Management

• Establish credit so it will be available in the future.

Slide 8

Study Credit Offers

8-3 Credit Management

Compare disclosure terms.o Interest rateso Grace periodo Annual feeo Minimum finance chargeo Transaction feeso Cash advance feeso Late feeso Over-the-limit fees

Slide 9

Avoid Unnecessary Credit Costs

8-3 Credit Management

• Keep the number of credit cards and accounts to a minimum.

• Comparison shop for credit cards.

• Consider special deals and financing.

• Use credit to get sale prices.

• Time your credit purchases.

• Get cash rebates and rewards.

• Pay bills on time or early.

Slide 10

Avoid Unethical Loan Practices

• A loan shark offers illegal unsecured loans at high interest rates.

• An advance-fee loan includes a large upfront fee.

8-3 Credit Management

• Equity stripping involves giving a loan to a homeowner who cannot afford it, then taking possession of the home.