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After completing the build your proficiency diagnostic from chapter 5 and 6 that I scored
the lowest on was, ''Evaluate consumer loan choices based on your financial needs, loan
terms, and costs,'' for chapter 5, and for chapter 6 was ''Evaluate mortgage financing
alternatives.'' These are important for me to understand it because these are part of the
major parts of finances. When learning about these things you need to understand every
part of it.The advice I would give my friend that is trying to buy and look for a home is,
look for the right area, what type of environment is the house, price of the home, how much
to keep it maintained, there is so much to look at when looking and buying a new home. To
determine what is affordable is looking at what you make in a month and average out how
much all the bills would be for the house and see if you would be able to do so.My advice
for keeping good credit would be to not apply for credit cards back to back, applying for
loans you know it's going to be hard to pay back, don't go to the E.R unless it's necessary;
but if you have insurance it's fine. Sadly almost everything does a credit check to see if
you're good enough for whatever it is you're applying for. Only apply for something is it
needed.The two C’s that are important in making a major credit decision would have to be
Collateral and character. The reason for collateral being on of the important C’s is because,
you agreed to pay the company back that lended you the money. Which you don't do so
does not look good on your credit score. Anything you own they will come take and sell to
get here money back that you sadly did not pay back. Next, is character, this is also
important because this shows the company that's looking into you to see if you qualify for
a loan. If you ever got a loan but never paid it back, but if you have then that makes you
getting approved for a better chance.
In real life the next car that im getting is a cash car just because i will own it myself title in
hand. I won't have to worry about monthly car payments, high insurance and no title in
hand. But now I have leased a car twice before the first one transmission broke on me so
they put me in a new one but I had to pay for my payments and insurance. I prefer to get a
car leased just because of the fact that if something breaks i can take it to the car dealership
as well as a newer car. Sadly im 20 years old and been through 2 leasing and 3 cash cars in
now it makes 3 years. So my luck with cash or leasing isn't good, but they are right, it is all
about the person.
I believe the 2 most important C's of the 5 C's are conditioning and collateral's for multiple
reasons. Starting with conditioning, which I believe is important because it plays the role of
the base of all entire loan itself. Being as though the conditioning includes the purpose of
the loan, the amount involved and prevailing interest rates for me this would be important,
the most important details actually the structure of the entire loan so to speak. The
conditioning will give a breakdown to the person of everything they need to know because
it is in fact the conditions of the loan such as interest rates and amount of principle. Lenders
are more likely to approve loans that are made for a specific purpose as opposed to a
signature loan. Collateral matters a lot for me because collateral can help a borrower secure
a loan. Collateral is used by the lender just in case for reasons the borrower can not repay
the loan, the lender receives the collateral in place of the funds. Most times the collateral is
the thing the borrower is borrowing for such as a house or car. My lowest score was on
buying and leasing a car. I have actually looked into buying or leasing a car in real life and
I still don’t understand the difference. It is important to my personal finances to understand
which is better for me and my family. I really want to know more because I think if I
understood better what the perks for leasing a car it would work better for me.
My first advice when advising a friend on buying a home is to minimize debt and work on
making your credit score better. Then I would advise to not only look at used and new
home but also foreclosures. When they find their perfect are to constantly keep watch and
not to rush into anything.
Credit score is incredibly important. It helps with not only buying a home but also a car.
The things that I have found out about credit is a lot. I have learned that your credit cards
should always stay under 30%. That you should have open accounts but also close them.
Another thing is making your payments more than 3 days early help your credit score .
Maintaining a positive credit history is simple when you make payments on time without
fail. For every loan, this applies and if you can always pay more than the minimum amount.
When using Credit cards, you don't want to make purchases more than ten percent and
certainly not over thirty percent of the credit amount and make your payments on time.
That is credit utilization and will be used in factoring your credit score. Be sure to plan how
much interest you may incur over the amount and the year for the credit. Lastly, utilize all
the perks you can that may benefit the use of that credit you’re using.The Five C’s include
Capacity, Capital, Collateral, Character, and Conditions. All of these significant credit
decisions are important. The most important I would say is Character and Capacity.
Character because it is historically reviewing your whole credit history and determining if
you had a bankruptcy and how long you can manage jobs. Every loan I have used has
looked into my character before proceeding. Capacity, I would say, is second because this
includes your current cash flow assessment on expenses and if you can make on-time
payments with income and other payments you may have. Most of every loan ran my credit
and then proceeded with the following steps. If I were to fail any of these, I would stop
there until my credit score and payment history, and income after expenses was sufficient
for the loan to be borrowed.Between owning a car and leasing, I will choose to own a car.
Last year, my wife and I finally paid off her car loan. We now save almost $350 a month.
However, I would consider leasing if I did not have a family and how much I drive for
work each week. But, because I have a family, it helps add something to my asset column,
and I have that freedom for future options with an owned vehicle.. When my score is 800, I
will feel like I have made it. I made some sloppy immature decisions in the past with credit
and I am just about done paying for them. I have learned that credit takes for ever and then
some to build, but quick to ruin it. Some good tips I have learned along the way are to
make payments early and more than the minimum. Early to not get penalties, more than the
minimum to avoid interest if possible. Getting confirmation I payment went through, and
reminders a head of time will help with last minute difficulties.
I would say of the five C's, capacity is a huge consideration. If you don't have the funds,
you don't get the fun. Simple as that. Be patient and wait until finances are ready for the
risk. Next I would say is character. If your credit history isn't great, why should a lender let
you borrow? It really is all in goo faith, but accountability is huge here. Owning up to
defaulting is one thing, but correcting and acting is another. Your history will eventually
show through your hard work.
I have leased a car for three years, and recently resigned a new lease. I loved leasing
because it was more affordable for me at the time. I also have had to have a cosigner to
help me do a lease, so I am not ready to buy a car yet. However, I would like to buy my car
at the end of my lease. I am confident that in another three years time. I will have matured
and have enough accountability and knowledge of the responsibility I will be taking on. On
the subject of leasing versus buying, I've always looked at it in terms of return on
investment. Leasing a vehicle is less expensive outright than buying, and as such short-term
it is a viable option. Long-term however, renting/leasing anything becomes less desirable as
the money spent into a lease yields no returns. For example, renting an apartment in my
area costs circa $1000 a month in rent and utilities. Calculated over a year, that's $12000
that you will never see back, which adds up over a long term habitation. For the same unit
purchased as a condominium, the up front cost is circa $45000. Assuming you put 15%
down, your mortgage and utilities payment for that apartment would run you around $550 a
month, during which time you would build equity for a later sale. When selling that
apartment, you can expect to make roughly 8% per year (the area average for housing
inflation). Calculating at simple interest (in this scenario the interest would be compound
due to rising home value) after one year your cash flow for the home (value increase vs
home expense) would net a loss of $6000 (half that of what would be spent on rent for that
twelve month lease). The same concept applies to cars and leasing. Financially, any sort of
renting is only viable as a short term alternative to buying (or investing).
When discussing credit scores, the common misnomer is that only individuals with money
have good credit. Anyone can have a strong credit score, as it is just a way to calculate how
likely (or unlikely) you are to default on a loan. A piece of advice for credit I've always
heard is to get a credit card, put one recurring expense on it, and pay the balance every
month. Doing this will allow you to generate a strong history of paying your dues in a
timely and consistent manner. This tells possible lenders that you have a good character to
repay your loans. The only other thing your credit score can reflect is your capacity.
Individuals with large purchases using credit (housing loans, car loans etc.) can show their
capacity to repay big-ticket items over time, exhibiting their dependability on more than
just consistent small expenses. I was unfamiliar with the credit consumer rights that are
afforded me, which resulted in my lowest score in chapter 5. It is extremely important to
have a full grasp on your consumer credit rights that are clearly established to ensure that
you are not mistreated in any unlawful manner. My scores were rock solid in chapter 6 so
I'm pretty good to go on that area of knowledge.My friend would have to deicide the dollar
amount that he or she can afford to pay monthly for a house payment. He/She will need to
include the cost of insurance, property taxes, possible HOA fees, closing costs, maintenance
costs, etc. Then They will need to figure out how much money he or she has to put down
towards the home loan. He, she, or zee will then need to figure out the maximum affordable
loan amount. Then start house hunting while keeping in mind the local crime rates, natural
disaster zones, school districts, points of personal interests, evacuation routes, job location,
etc. Then my friend who may or may not want to be identified as a non-binary pansexual
timber wolf will also need to consider the year and condition of the homes that fall within
the previous guidelines. Credit cards can help greatly when utilized properly. Get a 2 to 3
credit cards and use them for purchases that you would normally make. Then pay them
down with the money you actually have. Try to keep the amount of credit used to hover
around 10-15 percent of the total amount on each card. Don't have more than a couple big
ticket items of debt at a time. House and car payments are good for examples. Don't throw
a boat, RV, and some other large loan on top of the pile. Just because you can afford it
doesn't mean you can afford it. You know what I mean. You'll drown in debt quicker than
you think. Instead, pay off one then get the next.I do not harbor any bias towards one or
more of the C's over the others. I respect them equally, therefore I think they are all great
and necessary and I love them all .I'm a bit of an old timer in my heart. I believe in buying
a thing and owning it. I will always buy a car and drive it till the tires fall off. The option
to lease is alluring however I will continue scoff at people who have a new car every 2
years and are happy while they drive passed me on the side of the road while I pour water
into my radiator. I have learned so much from chapters 5 and 6 this week. Especially
because I want to buy my first home in 3 years. In chapter 5 my lowest score was on
"evaluate consumer loan choices based on your financial needs, loan terms, and costs. I do
not even know what to say to that one. I would not even know where to look for this
information. My guess would be, to look at my budget first, see what I can and can not
afford. After that I believe I would then go and speak with a lender.My lowest score in
chapter 6 was on "evaluate mortgage financing alternatives". This score does not surprise
me at all because I have never purchased a home....YET. I would for sure want to know
more about this topic because it will show my all the different options I have and how long
of a commitment I want to have to a home. I do not look at these low scores as a bad thing.
It puts everything in perspective when you are looking at the largest purchase of your
life.Credit score. Some people look at those two words as something horrible and others
look at those words as opportunity. As adults, we all know that having a good credit score
also means financial freedom. To build a good credit score you will want to have different
types of credit. One or two credit cards, mortgage, or even a consumer loan, such as a car
loan. You also want to make payments on time. Late payments can reduce your credit score
35%.When it comes to buying or leasing a vehicle. I personally would buy. I do not like to
have stipulations on how far I can drive. Knowing I had to stay under a certain amount of
miles over the lease term would cause me stress. I would never want to drive the car and it
would become a stressful money situation for me. I believe out of the 5 C's of Credit,
character and capacity are the most important. Character pertains to your job history,
education level, and financial past. Capacity describes how much cash inflow to cash
outflow per month. If you have a high cash inflow and a low cash outflow, your lender will
be more apt to give you a greater max out of the balance. If you show a reliable character
and a decent capacity, any lender will be willing to work with you.
It is fun to have ownership of a car until you run out of warranty and you have to repair it.
When selling a car that you own, the equity you already have in it will return to you. When
leasing, you have to put little money down, and the monthly payments are much cheaper
than if you bought a car. The biggest downside is that insurance is more expensive, and you
have to drive low miles; if you reach your miles limit, you will have to pay per mile. There
is no right or wrong choice! Personally, I would buy a car. I have no problem worrying
about repairs that will come up because my dad is Master Diagnostic Technician. I also
have no problem driving a car until it dies. One of the concepts I scored poorly on from
chapter 5 was evaluating credit card choices based on terms and costs. This concept is
important because unfortunately in the United States, credit card utilization is a very
important part of building one's credit history to be able to show your credit worthiness.
Knowing how to read the terms and requirements for each card and determining which one
would be right for you and your needs is crucial.
When buying a home, it is important first to know how much money you can allot towards
housing every month. Next, how much the other costs associated will be like homeowner's
insurance, association fees, and property taxes. Next, it will be important to note how much
money you have to use towards a down payment and also what your closing costs will be.
When calculating all of this information, you will need to take into account the interest rate
too. You would subtract your non-financed housing expenses (insurance, association fees,
and property taxes) from the amount you can afford for housing per month. Then you will
calculate in your interest rate and length of the loan which will then give you your
maximum amount of house you can afford.
When you are in the process of building and maintaining credit history, a huge part of that
is making regular, on-time payments. Also, not utilizing all of your available credit; so
having a low debt-to-income ratio is a good thing and what creditors look for when
determining if you are a good candidate for a credit card or a loan. These two factors make
a huge impact on earning and maintaining a good credit rating. b
Of the Five C's, I believe that the two that would have the biggest impact on major credit
decisions are: Capacity and Character. It will be important to know that you have sufficient
funds coming in regularly in order to make on-time monthly payments, you wouldn't be
true if you didn't have a job (referring to Conditions). Also, your Character, or credit
history, will be looked at heavily because lenders want to know that you have been able to
successfully manage your previous credit by making regular payments or paying off your
debt in the allotted amount of time or sooner.
I believe that when it comes to buying or leasing a car, it is completely variable and each
situation is different. So at the time, you would have to compare the two deals and look at
the big picture (long term, after the lease is up or would potentially be up) and take into
consideration how much the car would be worth. As I am still new to this entire credit
thing, unfortunately I do not know much about credit, nor credit scores other than it It take
time, responsibility and effort as well as knowing how to use a credit card in a way to
where it is building but not jeopardizing your credit score, not having to make late
payments or spending it on things that a credit card should not be used on.Myself
personally I would say buying a car is the best option. As for me I had just bought a jeep in
which i also had a choice to lease one. As it is my dream car I would not mind making
payments on it as I am able to make bigger payments to make the payments go down at any
point but in the end it will be mine. I believe if it is a car you actually want such as mine,
you wouldn't mind making fair payments for it. A friend of mine leases a car, to save
money to get their future dream car in the future which makes sense if the payments are
lower but also it isn't for that long, but in all it is up to the buyer in all and how they are
trying to go about things in general.The two C's that I believe are most would be character
and capacity. As character it is about the person you are, being able to show the
responsibility which is where looking at your credit comes into play. Being able to know
for sure you are able to make whatever payments that is negotiated when speaking upon.
For capacity I believe is a big one as loaners want to be reassured when it comes to them
being repaid. As your history of paying other people back comes into hand but also can
make a big impact on if they are willing to loan you money but also the trust they are
putting into you to pay back what has been given and also sometimes interest as well. My
personal advice for how to build and maintain your credit for your credit score would be to
make sure you are using it, making payments on time, and that you are not using too much
of your credit. Not only does using a certain percentage of your limit affect your score, but
so does making at least minimum payments on time and even making sure you have
something that is going towards your credit. When using the five c’s, to consider credit,
the most important in my opinion are character and conditions. Character is a very
important thing to consider when talking about credit. The character of a person who is
asking for a loan is something that can help determine their trustworthiness and even
credibility. Conditions are very important because you don’t want to agree to something
when the conditions are unrealistic to your situation or if you do not like the conditions for
what you are asking. I would personally say that buying a car is the better option for me.
Not only do I end up paying the car off and having no payment left after a certain amount
of time, but I also have a good rate for insurance as well as a family full of mechanics.
Making a trip to the shop a lot easier and cheaper for me. I am also an avid driver. I like to
go visit family a lot and go out as much as possible. I am a very busy person as well as a
very particular person on being able to do what I want with my property. So leasing a car
means I cannot change anything about the car to personally fit my needs, where if I own the
car I can do as I please with the vehicle. One concept from the Build Your Proficiency
diagnostic that I scored lowest in is Evaluate credit card choices based on terms and costs.
This concept can be important to my personal finances be because anything dealing with
your credit is important. You should understand different concepts in regards to credit to
help you when it comes to your personal finances. I would want to know more about this
because of course credit is important and you need credit to achieve different things like
purchasing a car or a home. My friend should know that the process of finding and paying
for a home is not an easy one. Your credit need to be in order as well as your debt to ration
and a bunch of other different factors to be considered. I would say to make sure you pay
your credit card bills on time and be sure to pay interest as well. You want to keep your
credit score at a good score because credit is a main factor that is considered when making
decisions like purchasing homes, cars. etc. I think the two most important factors are
Capacity and Collateral. Capacity is considered when repaying the loan and that is
important and can help your credit score. Collateral is important because it is what is
assessed when getting a car loan and majority of us need a car. This week i scored lowest
on describe the role of consumer credit in your financial plan in chapter 5. In chapter 6 it
was evaluating mortgage financing alternatives. I can be honest and say that these two are
pretty accurate in my everyday financial decisions. In my usual budget, consumer credit is
usually the last option for me. My house uses credit in a sparing fashion so I may be behind
the times in some of the ins and outs. We use it for the major stuff that either time or
savings doesn't support immediately. When we needed a new furnace, we financed because
we didn't have the 13k needed nor could we wait any with the failing unit. When it comes
to mortgage finance alternatives I can say that I am an ameteur as well. I have only
purchased one home and as far as I knew then it was all about having a big down payment
and getting a fixed rate. It was during the housing crash and people, mostly non-
professionals, harping on fixed rates and preapproval status. I knew to stay away from
variable rates because of the dreaded "balloon" payment. I didn't do much research out of
the aforementioned topics. Moving forward. These two factors will and are playing a big
part in the next financial goal of my family. We are in the market for another home and we
are currently using consumer credit cards to improve credit scores in order to have better
financial option during the next house hunt. Also, I am nearing the end of my loan for my
vehicle and considering adding another vehicle to use for "emergencies" such as the main
vehicles breaking down of needing repair.We all know that financing is all based on credit
score. I haven't been the best with it in the past but, as I get older and more financially
aware, my advice is to keep it simple. Start with a secured line of credit at an amount that
is not beyond your means. Utilize that to get into the flow of usage, payment history, and
seeing interest on purchases. After that, it may behoove you to see what offers you bank
and or credit union offers. Keeping all accounts within the same institution my be easier to
track and keep on time and current. Lastly, after establishing a solid credit foundation, look
into getting a card with a substantial credit limit. This is the EMERGENCY card when
"life" hits the fan. Keep it open for the oh no events that you may not have the cash up
front for. Ours is discover with no annual fees and it is kept in the home in a safe for the
heaving lifting. Its not a perfect path but it has worked for me and my household.As stated
before I will be in the market for a new vehicle in the future. It is my decision that I will
buy the car. I have had a small savings for the down payment and will be financing it as I
usually do. I choose this method because I like the fact that I own it after the loan is
satisfied. I am mechanically inclined so I save on regular maintenance costs such as oil
changes and tire rotations. I also take care of some of the intermediate repairs such as belts,
alternators, batteries, etc. Though I cover the parts for the repairs, I hardly incur any of the
associated labor. Based on my family needs, a third vehicle is a luxury but also a safety net.
It is well within the budget to do so and it will come in handy if the two primary vehicles
need to go in for repairs. No need to rent one.
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