Articles About Finance And Refinancing

Basic Principles of a Loan

Understanding the basic principles behind a loan can save new borrowers a lot of stress and make the borrowing process easier. This article will explore some of those loan basics.

A consumer loan is simply when a financial institution lends you money with the promise (from you) that you will repay the money. Most loan payments include both principal and interest.

Principle is the amount of money that you borrowed. Interest is the price paid for borrowing money; this is usually expressed as a percentage.

In an interest-only loan, the interest of the loan is paid off before the principal. It is important to understand this because many mortgages are interest-only loans. Using this kind of loan allows the lender to make a faster profit on the loan, and in return it also allows the lender to offer you lower interest rates.

Borrowers should understand that during the first years of an interest-only mortgage the entire monthly payment goes toward interest. Because of this there will be no decrease in the amount of the principle that was borrowed. In some cases, the initial interest-only payments are lower than the principal payments. This allows the borrower, who expects to earn more profit over time, to obtain a larger loan.

Variable Rates versus Fixed-Interest Rates

Aside from interest only loans, you may see offers for loans that are based on either variable rates or fixed rates. Credit cards generally use either the variable or fixed rates systems when calculating the interest.

Variable rate loans are based on the prime lending rate, and then some additional interest percentage is added in order to cover profits for the lender. Whenever the Federal Reserve raises interest rates, your bank will raise your interest as well. If the prime lending rate is low, variable rate loans and credit cards can be especially competitive with fixed rate loans.

Fixed rate loans and credit cards offer you guaranteed interest rates that do not fluctuate. You will know what your payments are each and every month based on the fixed rate percentage of the loan that you took out. This offers consumers more emotional security because they do not have to worry about their monthly bill increasing suddenly.

All borrowers should understand that variable rates are different than teaser rates. Teaser rates are temporary and last only for a limited time, usually three to six months. Once that period of time is over, the rate will go up and so will your monthly bill.

One of the most important principles behind a loan is establishing a good credit history. The fastest way to get a poor credit rating is to not pay your monthly bill or to be habitually late in paying your bill. These activities are usually reported to the three big credit reporting agencies and this information will stay on your credit history record for years to come. If you must take a loan out make sure that you can make the monthly payments on time.

If you have any questions about your loan or the interest that is being charged ask the credit person to explain it to you in detail. They are happy to do this. As a general rule, try to keep your non-mortgage debt payments below 10-15% of your monthly take home pay.

Peter Kenny is a writer for The Thrifty Scot, please visit us at Unsecured Loan and Consolidation Loan Visit http://www.thriftyscot.co.uk

Other Article Sites

findabook.com  moneycd.info  a-mortgage.info   about-lemon-laws.info  aboutstudentloans.info
all-about-publishing.info  auctions-articles.info  bestcollege-university.com  bestispconnection.com
biblefolder.com  blogger-website.com  books-used.info  brokers-guide.info  buywindows.info  cable-dsl.info
career-miner.com  carpel-tunnel.info  cashinaflash.info  cashloanreviews.info  casinobell.com  chat-house.info
clearmycredit.info  collegeloantips.info  crones.info  depression-articles.info   dirnic.net  dishguides.info
divers-below.com  expodog.info   financewizz.com  fire-insurance.info  getgood.info  handleit.net   it-idea.info
health-supplies.info  hosting-right.com  insidealert.com  insurance-facts.info  jobs-employment.info
justgood.info  lookgold.net   lowcost-travel.info  money-source.info  myhostzone.info  numisblog.com
peoplesearchfinder.info  pr-articles.info  realeas.com   refinancing-guides.info  spyware-remove.info
telelot.info  the-law.info   toppaid.info  travel-deals.info  travelcorrect.com  wedding-guide-site.com
your-blog.info  your-credit.info

MORE ARTICLES:

Granite Commercial Management to Attend the 11th Annual CMBA Western States Commercial Real Estate Finance Conference
Granite Commercial Management (GCM) will attend and host an exhibit booth at the 11th Annual CMBA Western States Commercial Real Estate Finance Conference at the Wynn Las Vegas in Las Vegas, Nevada on September 14-16, 2008.

Get Debt Free Fast With Smart Mortgage Refinancing
Now that you have purchased your dream home, you are now knee-deep in debt and facing heavy financial pressure. There is one useful solution used by many savvy real estate investors, a solution that involves more cash flow, lowered interest rate and lesser monthly payment. This financial tool, known as mortgage refinance, is not complicated at all, and only involves a bit of calculation and smart leveraging of money.

Should You Discard Your Credit Card Wallet?
With technology come a whole slew of innovations that allow you to pay for products and services on a "cashless" basis Your credit cards are proof of this, which is why you have a specially-designed credit card wallet

You Can Shine Like A Star If You Refinance Mortgage In Arizona
Stars are almost twinkling gleefully in Arizona all year round. When you stare up in the skies around the Grand Canyon State, you would not miss to catch the Big Dipper, Orion?s Belt or even the Northern Star as they seem to smile back at you as the whiff of the warm desert air is tickling your face. This is such a romantic view for couples out in a honeymoon, who do not want anything but to hold each other?s hand and watch the stars as they emit a faint light on the face of the person they love. It is no big wonder at all that, because of Arizona?s almost cloudless skies and fine air, it was the premiere choice to be the site of the U.S. National Observatory. However, it is not only the shimmering stars that can bedazzle you in Arizona. Yo...

Credit Card Processing Solution Company Recognized for Performance and Customer Service
A1 Merchant Accounts, a provider of merchant account processing solutions, is recognized for its commitment to customer satisfaction and top performance in the industry.

New Mortgage Freedom Program Launched - Pay Debt Down Faster Without Increasing Payments
Vancouver based financial planning company launch "The Mortgage Freedom Program". A new and exciting system allowing people to pay down existing mortgages and debt faster, without having to increase payments. The product also creates tax deductions and an investment on the side.

Writing HI-LO Material (High Interest, Low Ability) for Slow Readers
To write books for readers at an elementary reading level (for either adults or children) you start off exactly the same way as you do any other book: you work out a strong plot and people it with interesting characters.Your primary concerns: To write a story that will seize the interest of the reader immediately (reluctant or emergent readers aren't going to waste time on a story that doesn't look interesting)To try to stick to one idea per sentence.

Car Loan Provider Should Offer Lending Expertise
Brits now have wider access to car loan provider products This is great news to consumers who have consistently over paid for car financing by taking on expensive dealer finance plans

Home Equity Loan – A Reverse Mortgage Could Provide a Comfortable Retirement!
While only comprising about 1% of all mortgages, the reverse mortgage has gained in popularity in recent years. Federally insured since the late 1980's, the reverse mortgage allows owners of paid-off homes to borrow against the equity in their homes in the form of a lump sum, a line of credit, or in the form of monthly payments.

Construction Loan Mortgages Finance Dream Homes and Vacation Properties
Construction loan mortgages can turn a vacant piece of land ? whether in a not-as-yet developed suburban tract, or the wilds of a favourite rural escape ? into a person?s dream home, chalet or vacation retreat Because these loans are the vehicles that turn a person?s vision of where they would like to live, or where they would like to vacation or retire, they are sometimes referred to as ?dream loans?

Purchase Order Financing - A Tool To Finance Your Growing Orders
Do you have more purchase orders than what you can handle? Is lack of financing preventing you from fulfilling those orders? One of the most frustrating things that can happen to a business owner is to turn orders away ? good orders ? because you don?t have the financial capacity to fulfill them.

Westover Financial, Inc. Establishes Hospitality Equipment Leasing and Financing Division, Westover Hospitality Equipment Finance
Westover Financial Inc., plans to address the unique and sometimes "non-traditional" equipment financing and leasing needs of the restaurant, hotel, motel and leisure industry. By forming this entity, Westover Hospitality Equipment Finance can serve the specific needs of customers and equipment vendors alike nationwide. It also fills an anticipated lending/capital void for 2008 in this industry, given the current liquidity situation in the banking industry today.

Tips In Getting The Best Home Loan Rate
If you are getting a mortgage, you should settle only for the best deal out there in the market. Find out how you can get a good mortgage deal through this article.

GreenBank USA and Merchant E-Solutions Expand Payment Processing Services to Businesses
Merchant e-Solutions, Inc. (MeS) said it will provide GreenBank USA and its merchants with the industry's most innovative payment gateway, processing platform and web-based reporting system.