Personal Loans 101

Personal Loans 101 is a financial literacy initiative intended to inform and educate consumers about small dollar loans and credit insurance. Personal Loans 101 makes information available that empowers consumers with financial life skills and better positions individuals and families to make well-educated financial decisions.

Understanding Personal Loans

Understanding Personal Loans, takes potential borrowers through a process of self-assessment by asking a series of questions:

  • Is a personal loan right for me?
  • How do I know if I can afford a loan?
  • What happens when I apply for a loan?
  • What happens if I am late with a payment?
  • What terms of financing should I understand before taking out a loan?
  • Which laws exist to protect me?

The brochure provides worksheets that allow borrowers to create monthly budgets to gauge their ability to repay a loan, and compare different loans.

Download Now
Understanding Personal Loans

Understanding Your Credit Risk

Understanding Your Credit Risk stresses the importance of understanding the risk in differing loans products. Understanding Your Credit Risk details a number of factors that potential borrowers should consider when assessing the risk of a particular type of loan:

  • Borrowers can increase their chances of finding a loan that fits their needs by selecting a lender that assesses their ability to repay a loan by looking at credit history, income, expenses and existing debts ("underwriting").
  • Borrowers must understand the risk of loans that must be repaid in a single "balloon" payment or that require a post-dated check or collateral such as a car title.
  • Borrowers should be aware that by using lenders that report to credit bureaus can improve their credit and, by doing so, increase the number of credit options that are available to them.
Download Now

Understanding Payment Protection Insurance

The brochure identifies the major types of payment protection insurance, and answers some important questions about the products. The brochure emphasizes that payment protection insurance is not required to get a loan and that borrowers can cancel the insurance at any time.

Download Now
Understanding Payment Protection Insurance
Understanding Small Dollar Loans

Understanding Small Dollar Loans

Understanding Small Dollar Loans compares and contrasts installment loans with payday, pawn, and car title loans. A chart summarizes the differences between these different products.

Download Now

Understanding APR

The brochure explains that APR, or Annual Percentage Rate, is one factor that can be helpful in comparing loans of similar size and duration, but is not helpful when comparing different types of loans.

Under the Truth in Lending Act (TILA), lenders are required to provide, in writing, the loan's:

  • APR - the annual cost of credit expressed as a percentage;
  • Amount financed - the dollar amount of credit provided to a borrower;
  • Finance charge - the total dollar cost of credit; and
  • Total payments - the total amount of money that will be paid over the loan term.

Download Now

Understanding APR