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Paying for college and cars

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Presentation on paying for college and cars.

Presentation on paying for college and cars.

Published in: Economy & Finance, Business

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  • 1. Paying for College and Cars FDIC Money Smart for Young Adults Building: Knowledge, Security, Confidence
  • 2. Pre- Assessment
    • What is a secured loan?
    • A loan where the borrower offers collateral for a loan
    • A Loan where no collateral is needed
    • A low interest-rate loan
    • A loan that can be approved quickly
  • 3.
    • When you finance a car, the car then becomes ___________ for the loan.
    • Payment
    • Credit
    • Collateral
    • The title
  • 4.
    • Why should you want to avoid a rent-to-own situation?
    • Because you would pay a large interest rate.
    • Because it may cost you more in the end.
    • Because you are the legal owner of the property.
    • Because you do not have to purchase the item .
  • 5.
    • Which of the following do you NOT need to consider when deciding on whether to finance or lease a car?
    • Wear and tear
    • Monthly payments
    • Mileage limitations
    • Cost of fuel
  • 6.
    • What is the first step in applying for financial aid?
    • Talk to your financial advisor.
    • Complete the FASFA.
    • Apply for college.
    • Calculate the cost of college.
  • 7. Purpose
    • Car loans
    • Student loans
    The Paying for College and Cars module provides general information on installment loans, including:
  • 8. Objectives
    • Differentiate between secured and unsecured installment loans
    • Explain why installment loans cost less than rent-to-own services
    • Identify the factors lenders use to make loan decisions
    • Identify questions to ask when buying a car
    • Describe college loans and loan programs
    By the end of this course, you will be able to:
  • 9. Todd Wonders about Loans for College…
  • 10. Installment Loans
    • Repaid in equal monthly payments
    • Repaid for a specific period of time, usually several years
  • 11. Types of Installment Loans
    • Secured loan
    • Unsecured loan
  • 12. Secured Loans
    • Offers collateral for the loan
    • Gives up his or her right to the collateral if the loan is not paid back as agreed
    The borrower:
  • 13. Unsecured Installment Loans
    • Sometimes called personal or signature loans
    • Can be used for:
      • Education expenses
      • Medical expenses
  • 14. Benefits of Unsecured Installment Loans
    • Fast approval time
    • Interest rates lower than credit card rates
  • 15. Activity 1: Unsecured Installment Loan Tips
    • Complete Activity 1 in your Participant Guide
      • Review the loan tips
  • 16. Cost Terms Related to Installment Loans
    • Annual percentage rate (APR)
    • Fixed-rate loan
    • Variable-rate loan
    • Finance charge
  • 17. Activity 2: Cost of Installment Loans
    • Complete Activity 2 in your Participant Guide
      • Review the terms
      • What terms are being described in each scenario?
  • 18. Activity 3: Consumer Loans vs. Rent-to-Own
    • Complete Activity 3 in your Participant Guide
      • Break into 2 groups
      • Read through your section of material
      • List and describe 5 reasons to choose your payment method
  • 19. The Four Cs
  • 20. Activity 4: Loan Approval
    • Complete Activity 4 in your Participant Guide
    • Apply for a loan and see if the Loan Officer will approve you:
      • What is the loan for?
      • How much is the loan?
      • How do you qualify?
  • 21. Car Loans vs. Car Leases
    • Ownership potential
    • Wear and tear
    • Monthly payments
    • Mileage limitations
    • Auto insurance
    • Cost
  • 22. Activity 5: Car Loans vs. Car Leases
    • Complete Activity 5 in your Participant Guide
    • Role play to prove your case to the other side of the class
      • Car Salesman
      • Teen who wants to buy a car
      • Parent/Guardian
  • 23. Financing a Car
    • Car is collateral for the loan
    • Lender holds the car title
    • Amount you pay depends on the price of the car, the APR, and length of loan
    “ Getting a car loan” = “Financing a car”
  • 24. Where to Obtain Car Loans
    • Banks
    • Credit unions
    • Thrifts
    • Finance companies
    • Car dealerships
  • 25. Loan Pre-approval
    • Loan pre-approval:
    • Is a free service
    • Does not obligate you to accept a loan offer from the institution
    Lender figures out how much they will lend
  • 26. When Dealers Offer Low Interest Rates
    • 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
  • 27. Participation Fees
    • Example: To get a 2 percent APR, you pay a participation fee of $200
    A charge to get a lower rate
  • 28. Beware of Dealer-Lender Relationships
    • Dealer might pick the lender that makes the most profit for the dealership
    • Lender might pay money to the dealership for referring you and other customers
  • 29. Activity 6: Beware of Dealer-Lender Relationships
    • Complete Activity 6 in your Participant Guide
        • Review the instructions
        • Answer the questions
  • 30. Activity 7: Auto Financing Tips
    • Complete Activity 7 in your Participant Guide
      • Review the tips
  • 31. Car Title Loans
    • Short-term (usually 1 month) loans
    • Use your car as collateral
    • Watch out for high interest rates
  • 32. Activity 8: Beware of Car Title Loans
    • Complete Activity 8 in your Participant Guide
      • Review the instructions
      • Answer the questions
  • 33. Cost of College Calculator Income – Expenses = $ __________ (Your Balance) Expenses Income Education $ Family Contribution $ Tuition Parents Books You Fees Friends/Relatives Supplies Transportation $ Financial Assistance $ Bus/Air/Train Summer Job Savings Car Payment Other Savings Car Repair/Insurance Housing $ Financial Aid Grants $ Mortgage Pell Dormitory/Rent FSEOG Utlities ACG/ SMART Telephone Institutional State Food $ Federal Direct Loans $ Room & Board Plan Subsidized Stafford Groceries Unsubsidized Stafford Health $ Loans $ Insurance Federal Perkins Doctor/Prescriptions FFEL State Personal/Miscellaneous $ Employment $ Laundry/Cleaning Federal Work-Study Drug Store Items Institutional Clothing Off-Campus Entertainment $ Scholarships $ In-School Interest $ Other Income/Resources $ Direct Unsubsidized Loan Emergencies $ Other Expenses $ Credit Card Payment Total Expenses $ Total Income $
  • 34. Activity 9: Cost of College Calculator
    • Complete Activity 9 in your Participant Guide
        • Review the items in the Cost of College Calculator
        • Is there anything in the Expense column that you do not understand?
  • 35. Tips to Getting Aid
    • Read all instructions
    • Apply early
    • Complete tax returns
    • File FAFSA electronically
    • Locate any additional forms
  • 36. Scholarships
    • Designated for students who fit a particular profile
      • Music
      • Arts
      • Athletics
      • Academics
  • 37. Activity 10: Grant Programs
    • Complete Activity 10 in your Participant Guide
    • Review the information about:
      • Federal Pell Grant
      • FSEOG
      • Academic Competitiveness Grant
      • National SMART Grant
  • 38. Federal Loan Programs
    • Complete the FAFSA to see if you qualify for federal programs
    • Private Loans also available
  • 39. Activity 11: Loan Programs
    • Complete Activity 11 in your Participant Guide
    • Review the information about various loan programs:
      • Federal Work-Study
      • Federal Perkins Loans
      • Stafford Loans (FFELs and Direct Loans)
      • PLUS Loans
  • 40. Repay Your Loan
    • Begin repayment after:
      • Graduation
      • Leaving school
      • Below half-time enrollment
    • Exit counseling
    • Consolidating student loans
  • 41. Activity 12: Alternative Ways to Pay for College
    • Complete Activity 12 in your Participant Guide
    • What are some other ways to pay for college?
    • Record your responses
  • 42. CONCLUSION: Even Ramón may need a Loan!
  • 43. Paying for College and Cars
    • Secured and unsecured loans
    • The cost of loans
    • The Four Cs of loan decisions
    • Car loans and auto financing
    • Scholarships and grants
    • Student loans
    Congratulations! You have completed the Paying for College and Cars module. You have learned about:
  • 44. Assess Your Knowledge Don’t forget to complete the Knowledge Check in your Participant Guide!
  • 45. Thank you!
    • American Debt Counseling, Inc.
    • 1 888 DEBT USA
    • www.americandebtcounseling.org