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LOANS Sources of Credit
Why do we need loans? <ul><li>We may need something that we do not have the money for currently </li></ul><ul><li>Cover th...
Secured Loan <ul><li>Loans that are protected by an asset or COLLATERAL. </li></ul><ul><ul><li>A home can secure a loan (H...
Unsecured Loan <ul><li>Opposite of secured loans because they are not backed by any collateral </li></ul><ul><li>Therefore...
Education Loans <ul><li>Form of financial aid that must be repaid with interest (4 types) </li></ul><ul><ul><li>Student Lo...
Education Loans <ul><li>Student Loans </li></ul><ul><ul><li>Federal loans to finance education. </li></ul></ul><ul><ul><li...
Education Loans <ul><li>Private Student Loan </li></ul><ul><ul><li>Unsecured and credit-based loans </li></ul></ul><ul><ul...
Auto Loan <ul><li>Secured loan to finance the purchase of a vehicle </li></ul><ul><ul><li>The automobile acts as collatera...
Mortgage <ul><li>Secured loan to finance the purchase of a home </li></ul><ul><ul><li>Home is used as collateral </li></ul...
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Loans PowerPoint

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Transcript of "Loans PowerPoint"

  1. 1. LOANS Sources of Credit
  2. 2. Why do we need loans? <ul><li>We may need something that we do not have the money for currently </li></ul><ul><li>Cover the purchase of a big ticket item </li></ul><ul><ul><li>Home </li></ul></ul><ul><ul><li>Car </li></ul></ul><ul><ul><li>Education Loans </li></ul></ul>
  3. 3. Secured Loan <ul><li>Loans that are protected by an asset or COLLATERAL. </li></ul><ul><ul><li>A home can secure a loan (Home Equity) </li></ul></ul><ul><ul><li>A car can secure a loan (Auto Loan) </li></ul></ul><ul><ul><li>Personal property can secure a loan </li></ul></ul><ul><ul><ul><li>Stocks, bonds, CDs </li></ul></ul></ul><ul><li>Best way to get a loan quickly </li></ul><ul><li>Secured Loans offer lower interest and monthly payments </li></ul>
  4. 4. Unsecured Loan <ul><li>Opposite of secured loans because they are not backed by any collateral </li></ul><ul><li>Therefore, lenders take on MORE risk and charge MORE interest </li></ul><ul><li>Examples include: </li></ul><ul><ul><li>Credit Cards </li></ul></ul><ul><ul><li>Student Loans </li></ul></ul>Lenders take a GAMBLE on you!
  5. 5. Education Loans <ul><li>Form of financial aid that must be repaid with interest (4 types) </li></ul><ul><ul><li>Student Loans </li></ul></ul><ul><ul><li>Parent Loans (PLUS Loans) </li></ul></ul><ul><ul><li>Private Student Loans </li></ul></ul><ul><ul><li>Consolidation Loans </li></ul></ul>
  6. 6. Education Loans <ul><li>Student Loans </li></ul><ul><ul><li>Federal loans to finance education. </li></ul></ul><ul><ul><li>Have low interest rates w/o credit check </li></ul></ul><ul><ul><li>Deferment options </li></ul></ul><ul><li>Parent Loans (PLUS Loans) </li></ul><ul><ul><li>Enable parents with good credit to borrow money to pay for their child’s undergraduate education expenses </li></ul></ul><ul><ul><li>Require no collateral </li></ul></ul><ul><ul><li>Interest is tax deductible </li></ul></ul><ul><ul><li>Interest rate is fixed at 8.5% as of July 1 2006 </li></ul></ul>
  7. 7. Education Loans <ul><li>Private Student Loan </li></ul><ul><ul><li>Unsecured and credit-based loans </li></ul></ul><ul><ul><li>Available for education-related expenses </li></ul></ul><ul><ul><li>From private institutions (not Gov’t) </li></ul></ul><ul><li>Consolidated Loan </li></ul><ul><ul><li>Combine several student or parent loans into one bigger loan from a single lender </li></ul></ul><ul><ul><li>Interest rate is the weighted average of loans being consolidated. Capped at 8.25% </li></ul></ul>
  8. 8. Auto Loan <ul><li>Secured loan to finance the purchase of a vehicle </li></ul><ul><ul><li>The automobile acts as collateral </li></ul></ul><ul><ul><li>Term and interest can vary </li></ul></ul><ul><ul><ul><li>Lower interest rates available on new cars versus used cars </li></ul></ul></ul>
  9. 9. Mortgage <ul><li>Secured loan to finance the purchase of a home </li></ul><ul><ul><li>Home is used as collateral </li></ul></ul><ul><ul><li>Rates and term may vary </li></ul></ul>
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