This page uses JavaScript. Your browser either does not support JavaScript or you have it turned off. To see this page properly please use a JavaScript enabled browser.
Members First CU of Florida Go to main content

We will be closed on Monday, October 14, in observance of Columbus Day. You can access your account anytime, anywhere, with Internet Banking and our mobile banking app. 

Become A Member Apply for a Loan Branches ATMs
Home > Blog > What to Know About Loans
What to Know About Loans9/6/2024

youth leaning on car

In short, a loan is money that you borrow. While there are lots of different loans (i.e. auto loans, home loans/mortgages, credit cards, and more), there are two basic types of credit — installment and revolving credit.

What is installment credit?

Installment credit accounts allow you to borrow a lump sum of money. The money you borrow is then paid back in fixed amounts or "installments" typically on a monthly basis. Additionally, once your loan is paid in full, it's closed.

Types of installment credit/loans include:

  • Home loans/Mortgages that cover the purchase or refinance of a home.
  • Auto loans that fund the cost of a new or used car.
  • Student loans that fund the cost of education, tuition, room, and board.
  • Personal loans that can cover the cost of a new laptop, pay for medical bills, travel expenses, etc.

What is revolving credit?

Revolving credit accounts give you access to an ongoing line of credit. Meaning, you can borrow funds as needed as long as you don't exceed your credit limit. At the end of each billing cycle, you're required to make a minimum payment towards your account. It's recommended that you pay more or pay the balance you owe in-full, otherwise you're subject to interest charges. Unlike installment credit, when you pay off your balance on your revolving credit account, the account remains open for you to continue drawing funds as needed.

Types of revolving credit include:
 

  • Credit cards are the most common type of revolving credit. Credit cards can be used to cover your daily expenses, a large purchase, or emergency expenses. Some credit accounts will also offer rewards or other additional perks.
  • Personal lines of credit function similarly to credit cards. However, how you access the funds is different. Funds or personal lines of credit are typically accessed by writing special checks, calling your lender, or stopping by your credit union to draw the funds from your account.
  • Home equity lines of credit (HELOCs) accounts allow you to borrow against the value of your home. HELOCs are typically used to fund home repairs or renovations, but they can be used for other expenses as well.

What should you consider when you apply for a loan?

Just like you've shopped around for the type of car you want, you should also shop around for the right loan for you. A unique benefit of being a member of a credit union, like Members First Credit Union of Florida, is that credit unions typically offer better rates and terms on loans than banks and other lenders do. Additionally, your credit union will work with you to better educate you about the loan process and help you qualify for a loan later if you don't qualify for one now.

While you're shopping around, consider the following:

  • Loan amount - What is the total dollar amount for the loan?
  • Interest rate - What is the interest rate of the loan?
  • Loan term - What is the number of years over which you will repay the loan?
  • Monthly loan payment - What is the monthly principal and interest payment (PI)?
  • Annual percentage rate - What is the Annual percentage rate or APR?
    The APR is a standard calculation used by lenders. It's designed to help you compare different loan options. For example, a loan that has a lower stated interest rate might not be a good deal if it comes with high fees. But, a loan with a higher stated rate but minimal fees may offer a better value. APR calculations combine these fees into a single comprehensive rate, allowing you to compare loans with varying fees, rates, or terms more effectively.

Once you have the information you need, compare it so you can make a decision that's right for you.


 



How Useful Did You Find This Information?

Let Us Know

Powered by Delighted.

 



« Return to "Youth" Go to main navigation
I Want To
I Want To
Loan Center
Loan Center
Credit Cards
Credit Cards
Careers
Careers
Special Offers
Special Offers
Members First CU of Florida
InstagramTwitterfacebookemailWordpressYouTube
NMLS #405711
Equal Housing Lender National Credit Union Administration
This Credit Union is federally-insured by the National Credit Union Administration. We do business in accordance with the Fair Housing Law and Equal Opportunity Credit Act.
Members First Credit Union of Florida is not affiliated with Members First Credit Union (Kentucky)

Members First Credit Union of FL is committed to providing a website that is accessible to the widest possible audience in accordance with ADA standards and guidelines. If you are using a screen reader or other auxiliary aid and are having problems using this website, please contact us at 877-434-6328. We are actively working to increase accessibility and usability of our website to everyone. All products and services available on this website are available at all Members First Credit Union of FL branches.

 

Any external links or websites to alternative sites are not operated by Members First Credit Union of FL. We are not responsible for the content of the alternate site or their accessibility standards.

BACK TO TOP