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. a
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.
