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    Power Point Slides Power Point Slides Presentation Transcript

    •  
    • Introduction
      • Instructor and student introductions
      • Module overview
    • Student Introductions
      • Your name
      • Expectations, questions, and concerns about borrowing money
    • Purpose
      • Borrowing Basics:
      • Describes how credit works and the types of credit available.
      • Helps you determine if you are ready to apply for credit.
    • Objectives
      • By the end of this course, you will be able to:
      • Define credit.
      • Explain why credit is important.
      • Distinguish between secured and unsecured loans.
      • Identify three types of loans.
    • Objectives (Continued)
      • Identify the costs associated with getting a loan.
      • Explain why it is important to be wary of rent-to-own, pay-day loan, and refund anticipation services.
      • Determine if you are ready to apply for credit.
    • Agenda and Ground Rules
      • 60 – 90 minutes long
      • One 10-minute break
      • Training methods
      • Class participation
    • Credit
      • Credit is money you borrow to pay for things.
      • It is also called a loan.
      • “Good” credit means making payments on time.
      • “Bad” credit means it will be harder to borrow in the future.
    • Why Credit Is Important
      • It can be useful in emergencies.
      • It’s more convenient than carrying cash.
      • It lets you make large purchases.
      • It can affect your ability to get employment, housing, and insurance.
    • Collateral
      • Property or another asset you promise to give to the bank if you can’t repay your loan.
    • Collateral Items
        • Car Property
    • Types of Loans
      • Consumer installment loans
      • Credit cards
      • Home loans
    • Consumer Installment Loan
      • A loan used to pay for personal expenses:
      • Automobile
      • Computer
      • Furniture
      • College tuition
    • Credit Cards
      • Give you the ongoing ability to borrow money for:
      • Household,
      • Family, and
      • Personal needs.
    • Home Loans
      • Home purchase loans
      • Home refinance loans
      • Home equity loans
    • Practice Exercise – Types of Loans
      • Instructions:
      • Read the description of the purchase to be made.
      • Fill in the blank with the name of the most appropriate loan type for that purchase.
    • The Cost of Credit
      • Fees
      • Interest
    • Fees
      • Annual maintenance fees
      • Service charges
      • Late fees
    • Interest
      • The money financial institutions charge for letting you use their money.
      • The rate of interest is either:
      • Fixed
      • Variable
    • How Much Does Credit REALLY Cost?
      • Amount financed $5,000.00
      • APR 12%
      • Finance charge $600.00
      • Total paid $5,600.00
      • Watch out for “penalty APRs” and “universal default” on credit cards.
    • Practice Exercise – Borrowing Money Responsibly
      • Instructions:
      • Read each question carefully.
      • Answer the question.
      • Be ready to support your answer.
    • The True Cost of Alternative Financial Services
      • Rent-to-own services
      • Pay-day loan services
      • Refund anticipation services
    • Rent-to-Own Services
      • You use the item by making monthly or weekly payments.
      • The store owns the item until you make your final payment.
      • Using rent-to-own services is more expensive than getting a consumer installment loan.
    • Pay-Day Loans
      • Loans that:
      • Are made for a fee to people who need money right away.
      • Are paid back with the borrower’s next paycheck.
      • Are renewed for an additional fee if not paid off in the agreed-on time period.
      • Should be used only for emergencies.
    • Refund Anticipation Loans
      • These short-term loans are secured by your income tax refund.
      • The money for the loans comes from a bank or finance company.
      • They are more costly than you might think.
    • The “Four Cs” of Credit Decision Making
      • Capacity
      • Capital
      • Character
      • Collateral