There are times when an individual or family needs a large amount of cash that can only be obtained through a loan. The money might be used to pay medical bills, purchase a car, consolidate debt or replace an appliance that is beyond repair. When the situation becomes urgent, a lower monthly payment may be more important to the borrower than the total cost of the loan. Local Credit Unions help guide their members through the entire loan process. This includes a thorough explanation of the different ways a loan can be structured to provide a monthly payment that fits comfortably into the family budget.

Low Loan Payment Strategies

By changing the underlying components that are used in loan calculations, payments can be modified according to the needs of the borrower. Essentially, loan payments are most influenced by the following:

• Interest Rates: One of the most important elements that will affect a monthly payment is the interest rate that the lender will charge for the loan. Interest rates are largely determined by the credit rating of the borrower and the policies of the lender. A better interest rate will always result in a lower monthly payment when the amount and term of the loan are identical. Since Credit Unions are member owned, they generally offer very competitive interest rates when compared to traditional banks.
• Loan Term: Lengthening the term of a loan can substantially lower the associated monthly payment. For example: A 10,000 loan with a 5.25% interest rate and a 36 month term will carry a monthly payment of $300.82. The same $10,000 loan with a 5.75% interest rate over a 60 month term will reduce the monthly payment to $192.17.

It is important to recognize that the total cost for a longer term loan will be greater than a comparable short term loan. Extended repayment periods will also result in higher accompanying interest rates as well.

Credit Union Advantages

Your local Credit Union offers a wide array of products and services that serve the needs of their members. In addition to low payment loans, Credit Unions provide competitive rates on savings and money market accounts, as well as professional advice to help build a successful financial future.