Loan basicsInterest-only payments do not reduce principal
Understand why an interest-only period leaves principal outstanding and how to prepare for what follows.
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Loan basics
Understand the numbers and terms behind a loan.
31 GUIDES / PAGE 2 OF 3Loan basics
Loan basicsFixed payments are not always a fixed total cost
Look beyond a fixed installment to fees, payment timing and other costs that can change what you ultimately pay.
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Loan basicsWhat counts as collateral on a consumer loan
Identify the asset pledged as collateral and check restrictions, insurance and release procedures.
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Loan basicsCo-borrower and cosigner: different roles, shared risk
Clarify repayment responsibility, ownership and access to records before becoming a co-borrower or cosigner.
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Loan basicsWhat loan refinancing actually replaces
Trace a refinance from the old payoff to the new repayment schedule and compare costs from today forward.
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Loan basicsDebt consolidation is a new loan, not debt removal
Use a before-and-after debt ledger to judge whether a consolidation loan improves the repayment plan.
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Loan basicsPrecomputed interest versus daily simple interest
Ask how interest is calculated before judging the savings from extra payments or early payoff.
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Loan basicsUnderstanding a finance charge disclosure
Read the finance charge as a dollar measure of credit cost and reconcile it with the loan disclosures.
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Loan basicsAmount financed and total of payments
Distinguish usable credit, the note balance and the scheduled dollars repaid when reading loan paperwork.
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Loan basicsHow a grace period differs from a due date
Separate the contractual due date from a late-fee grace period and avoid treating either as an interest-free extension.
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Loan basicsLate fees, returned-payment fees and interest
Identify which event caused a charge and separate loan fees, bank fees and continuing interest.
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Loan basicsWhat a prepayment penalty can cost
Check the trigger and calculation of an early-payment charge before comparing payoff savings.
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