Understanding Your Finances Can Give You Power And Choice

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What is  finance  and what do you need to know?  Finance  can mean different things. It may refer to your personal financial situation. It could refer to your investments or a business’s investments. It could refer to a credit or loan purchase.

 Financing  can be involved in your life in different ways.

For example, if you are going to invest in a large purchase

such as a house or even a car. Large furniture purchases

and

credit cards all fall into these categories. Interest rates

are the most integral part of  financing . Why else would a

company want to loan you money or offer you credit? How

else

would they benefit? They benefit from the interest that you

have to pay in on  financing  your loan. There are different

types of  financing  options available.

The percentage rate is the amount of interest that you pay.

The percentage rate is the certain portion of your loan or

credit that you pay back in interest. For example, if your

loan was for $40,000 and your interest rate was 12.3% then

you would pay 12.3% of $40,000 in interest. The interest

would be added onto your $40,000 and you would pay it

back

via your monthly payments.

Fixed rate: A fixed rate means your interest rate will stay

the same no matter what. People usually prefer these. If you

can get a low fixed rate, it will stay with you even if

other average interest rates are going up. Balloon rate: A

balloon rate can fluctuate with the times and the stock

market but depending on the situation, this can be

beneficial to you as well. You will have to decide which you

think is best for you.

There are different types of  financing  options as we

mentioned earlier. Probably the most common example of

 finance  in the United States is credit cards. A credit card

allows you to make purchases with the card. The bank

issuing

the card will pay on your behalf and you then pay the bank

back, plus the interest. The bank makes money off the

interest and you get what you want right away.

The same thing applies to pay-as-you-go or rental furniture

companies. There are even rent-to-own housing services

now

where your monthly rent can go towards buying the house if

you want to stay.  Financing  should be a way to help you

achieve something that you’re going to be purchasing

anyway.

 Financing  can get you in your house quicker than saving up

the cash. Become knowledgable and  financing  can be a

tool

that will serve you well.

Source by Kathleen Sutera

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