Category: Loans

Anatomy of a Car Payment

When you get a loan to buy a car, you’ll get a new set of keys — and a new monthly payment. It may have you wondering how this payment is determined and how it’s calculated. 

So many questions, and we’ve got answers! Let’s break down the parts of a car payment, explain how monthly payments are calculated and offer tips for managing your payments well. 

What are the components of a car payment?

  • Principal 

      The principal is the amount of money you borrow to purchase the car. For example, if you buy a car priced at $35,000, and you put $5,000 as a down payment, the principal of your loan is $30,000. 

      A portion of each monthly mortgage payment will go toward paying down the principal balance of your loan. 

      • Interest

                Interest is the cost of borrowing money from a lender. It’s calculated as a percentage of the principal amount and is added to your monthly car payment. The interest rate on your loan will depend on a handful of factors like your credit score, the length of the loan term and the current market conditions. 

                • Loan term

                While this is not really a part of the loan, you’ll likely see this referenced on your monthly statement or loan bill. The loan term is the length of time you have for repaying the total loan, typically expressed in months. Common auto loan terms range from 36 to 72 months, with some loans extending even longer. The longer the term is, the lower the monthly payments will be, but the more interest you’ll pay over the life of the loan. 

                If you’ve rolled additional costs into the loan, they may also be part of your monthly payment. This can include:

                • Taxes and fees

                If you choose to finance taxes, registration fees or other upfront costs of the loan, these will be included in your loan amount and will increase your monthly payment. These costs are not itemized separately; instead, they’ll be incorporated into the principal.

                • Add-ons 

                Optional add-ons like extended warranties, gap insurance and other products you choose to finance will also be included in your loan principal, thus increasing your monthly payment.

                Additional costs of car ownership

                While not included in your monthly loan payment, these expenses are an inherent part of owning a car:

                • Insurance. Lenders typically require you to carry comprehensive and collision coverage as part of your financing agreement, ensuring the car is protected if in an accident. 
                • Maintenance. Your car will need regular maintenance and upkeep, which you’ll need to budget for. 
                • Fuel or electricity. Of course, you won’t be able to drive a car without gas or springing for electricity to power it.

                How are car payments calculated?

                To calculate your monthly payment, the lender will take the principal of the loan along with any add-on costs, and the interest amount due, and divide this number by the months in your loan term. This is the amount you’ll need to pay each month. 

                Managing your car payment

                Managing your car payment well requires careful planning and budgeting. Here are a few tips to help you stay on top of your payments and minimize the overall cost of your car loan:

                • Compare offers from multiple lenders to find the best interest rates and loan terms. 
                • If possible, make a larger down payment to reduce the amount you need to finance. 
                • Choose a shorter loan term.

                High Point FCU auto loans offer great terms, easy eligibility requirements for qualifying members and a quick application process. Call, click or stop by today to learn more. 

                How do I Raise my Kids to be Financially Independent Adults?

                Q: How do I help my kids become financially independent grown-ups?

                A: Teaching your kids how to be financially independent will help smooth the transition into adulthood. It will also give them what they need to stay financially stable throughout life.

                Here are some tips for raising kids to be financially independent adults.

                Start with basic budgeting

                Introduce your children to the concept of earning money and spending mindfully when they’re young, and build upon that as they grow up. Preteens can watch you work on an actual budget, and teens can even assist you in creating a budget for a large expense, like a family vacation. You can also help kids create a budget for how they plan to spend their own money.

                Split the costs of “must-have” items

                If your children are like most kids, they’re asking you for trending items they claim they must have; from a pair of designer jeans to the latest fad toy they insist everyone else already has.

                A great compromise is to have your child pay half the cost of expensive trending items. They’ll likely quickly see that a “must-have” really isn’t when you’re footing half the bill.

                Teach them about credit cards

                If your child sees you using a credit or debit card often, teach them what’s behind that card. Show them your credit card bill when it arrives and talk about how you need to pay for all those expenses during the month, plus the possible interest. Teach them about debit cards, too, explaining how money is withdrawn from your checking account each time you swipe the card. You can also give older kids a quick rundown on credit scores, how they work and why they’re so important.

                Talk openly about what they can expect in terms of support for the future

                When your child is mature enough to talk about the future, discuss how much financial support you plan to offer while they attend college, immediately after graduation and into their adult years. Ask about their plans as well, paying attention to when they anticipate being financially independent.

                You can bring up the topic of career paths, too. Help your child determine a basic budget for the lifestyle they plan to lead and assist them in narrowing down their career choices until they have just a few that will support their future life. Talk about student loans, too, and explain how crippling debt can be.

                If you haven’t already, consider opening a Youth Savings Account for your child at High Point Federal Credit Union. This way they can get hands on experience with a financial account and understand the importance of putting money away. If they get an allowance, or are gifted money at some point, you can encourage them to put a certain percentage in their account. Stop by one of our branch locations, contact us,  or call 800.854.6052 to discuss opening a Youth Savings Account.

                Use the tips outlined above to help raise your child to be a financially independent adult.

                6 Steps to Crushing Debt

                Getting rid of high debt takes hard work and willpower, but it’s doable. Here’s six steps to help you start crushing debt today.

                Step 1: Choose your debt-crushing method

                There are two approaches toward getting rid of debt:

                • The snowball method involves paying off your debt with the smallest balance first and then moving to the next-smallest, until all debts have been paid off.
                • The avalanche method involves getting rid of the debt with the highest interest rate first and then moving on to the debt with the second-highest rate until all debts are paid off.

                Each method has its advantages, with the snowball method placing a heavier emphasis on achieving results at a faster pace, and the avalanche method focusing more on actual savings to the borrower money in overall interest paid. Choose whichever method appeals to you more.

                Step 2: Maximize your payments

                Credit card companies are out to make money, and they do this by making it easy to pay just the minimum payment each month. Beat them at their game by maximizing your monthly payments. Free up some cash each month by trimming your spending in one budget category or consider freelancing for hire and channel those funds toward the first debt on your list. Don’t forget to continue making minimum payments toward your other debts each month!

                Step 3: Consider a debt consolidation loan

                A personal loan from High Point Federal Credit Union can provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest payment to make each month. Or, you can transfer your credit card balances to a single card having a low-interest or no-interest introductory period.

                Step 4: Build an emergency fund

                As you work toward pulling yourself out of debt, it’s important to take preventative measures to ensure it won’t happen again. You can do this by building an emergency fund. Start small, squirrelling away whatever you can in a special savings account and adding the occasional windfall to beef up your fund.

                Step 5: Reframe your money mindset

                What got you into this mess? Are you consistently spending above your means? Is there a way you can boost your salary or significantly cut down on expenses? Lifestyle changes won’t be easy, but living debt-free makes it all worthwhile.

                Step 6: Put away the plastic

                Credit cards are an important component of financial health, but when you’re working to free yourself from debt, it’s best to keep your cards out of sight and out of mind. Learning to pay your way with cash and debit cards will also force you to be a more mindful spender.

                Best of luck on your journey toward financial freedom!

                Buying Your First Motorcycle

                If you’re ready to get your first motorcycle, we’re here to help! Here’s all you need to know about buying your first bike.

                Secure financing

                It’s always best to have the financial details of a large purchase squared away before you start shopping so you can avoid disappointment later. You can save up for your bike, charge it to a low-interest credit card or apply for an auto loan from Olean Area Federal Credit Union for affordable interest rates and payback terms to best fit your budget.

                Brush up on your motorcycle safety

                Before you shop for a bike, it’s a good idea to complete a Motorcycle Safety Foundation (MSF) course. This is similar to driver’s training, and it will help ensure you can ride your bike in better safety. Depending on your state, you may also need to obtain a special motorcycle license.

                Procure insurance

                In some states, motorcycle insurance is required by law, but even if your state does not mandate it, consider purchasing it anyway. If you finance the transaction, it will likely be required you carry full coverage.  As is the case with auto insurance, you’ll have the freedom to choose how much coverage you’ll have, with more robust coverage directly increasing the cost of your policy.

                Choose between a new and used bike

                A used motorcycle can save you thousands of dollars, but finding one in decent condition can be challenging. Avoid bikes that have mileage exceeding 20,000 miles, and are difficult to start-up, run and/or stop. It’s also a good idea to get a VIN check on your potential new bike and to have it professionally inspected.

                A new bike, on the other hand, will be in perfect condition but is a lot pricier. It’s a good idea to run the numbers before setting your heart on a particular motorcycle.

                Choose a motorcycle type

                • Sport bikes-equipped with a leaning design, these bikes can be a good choice for thrill-seekers, but an uncomfortable option for riders planning to take long trips.
                • Standard bikes-an an upright riding posture and lack of accessories make these perfect for beginners and the budget-conscious.
                • Cruisers-tend to be heavy, but offer a relaxed riding position, making them an excellent choice for tall riders seeking a stylish ride.
                • Touring bikes-these motorcycles are loaded with extra features for long trips, including saddlebags to accommodate luggage and large fuel tanks.

                Once you’ve chosen your ride type, research models from popular brands and check out ratings and reviews from current owners. When you’ve narrowed down your choice, you’re ready to visit dealerships and private sellers.

                Important features to consider

                A motorcycle’s seat, handlebars, and foot pegs are not adjustable, so it’s important to choose one that fits comfortably. Consider the weight of your bike, too, since a heavier bike can be difficult to maneuver.

                Are you ready to buy your first bike? Contact us, apply online, or call 800.854.6052 to learn more about financing your motorcycle with Olean Area Federal Credit Union!

                7 Reasons to Buy an RV or Campervan

                If you’re thinking of road-tripping your summer getaway, think RVs. Recreational vehicles and their close cousin, campervans, are growing increasingly popular as more families hit the road for a true American adventure that’s easier on the wallet and heavy on unique fun. Here are six reasons to buy an RV or a campervan:

                1. Save money

                With a means of transportation and a place to stay all rolled into one, an RV helps you save significantly on your vacation costs. Plus, when you travel with an on-the-go kitchen, you can cut down on the money you’d spend feeding your family while on the road.  

                2. Privacy and comfort

                Why fight for legroom on a crowded airplane when you can travel in a vehicle that gives you tons of space? Move around as much as you’d like, enjoy a private bathroom and catch a few winks in the sleeping area, all while heading toward your destination.

                3. Increased flexibility

                When you travel using your own means of transportation, you’re in control. That means there’s no getting locked into specific dates for your getaway. Come and go as you please and vacation on the schedule that works best for you and your family.

                4. Explore more

                Traveling by RV will give you the opportunity to take in the sights and sounds of each place you pass through. You can even stop on the roadside to watch a glorious sunset or a passing herd of deer.

                5. Bring your pets along

                No need to arrange pet-sitters or to keep your furry friend in a carrier under an airline seat. When you buy an RV, you can bring your pets along and keep them nearly as comfortable as they’d be at home.

                6. Tax benefits

                In many states, owning an RV can mean enjoying significant tax benefits, which can include the homeowner’s deduction, a sales tax deduction and/or deducting the interest payments of your RV loan. Check with your accountant or tax pro to see which of these tax benefits apply to you.

                If you’re ready to purchase an RV or a campervan, look no further than Olean Area Federal Credit Union! Our RV loans have affordable interest rates, reasonable payback terms and easy eligibility requirements for qualifying members. Call, click or stop by Olean Area Federal Credit Union to get started!

                The Promises and the Perils of Buy Now, Pay Later

                Gotta have it now, but don’t have the cash? Why not buy now, and pay later? (BNPL). It’s the perfect way for you to walk away with that overpriced exercise bike even if your wallet is practically empty, right?

                Maybe. Or maybe not.

                Let’s take a look at these programs, how they work and what to be aware of before you sign up.

                How BNPL works

                You’ll find a BNPL button when checking out at most online retailers. This option will usually link you to a BNPL app, such as Afterpay, Affirm or Quadpay. A brick-and-mortar store may offer you this option at checkout as well. Here, too, you’ll pay up through an affiliated app.

                If you choose to go with a BNPL option, you’ll need to get approved. Apps will usually run just a soft credit check to confirm your information. Once approved, you can choose to link your debit card, checking account or credit card so the app can collect the payments when they’re due. Next, you’ll generally make a 25% deposit on the purchase, and the item is yours! Most BNPL plans require you to pay off the rest in three fixed installments, but payment schedules can vary.

                When to choose BNPL

                BNPL programs can be a good choice for items you urgently need, but can’t afford right now, like medical equipment that’s not covered by insurance. It can also be ideal for workers with an uneven income flow who may experience lean times of the year, but know that better cashflow is ahead.

                Why BNPL can be a bad idea

                It encourages overspending. It’s easy to think that, if you’ll only be paying a small part of the price today, why not buy it now instead of financing the full amount?
                Missed payments are penalized. Some services slap an interest charge on your outstanding balance, with rates as high as 40%. Other programs will charge a one-time late fee, which can be as high as $39. Others will tack on an extra fixed fee to all subsequent payments.

                It can kill responsible financial habits. If a consumer has purchased multiple items through BNPL programs, the monthly payments won’t be so minimal. The payments will need to be factored into a budget and can eat into other categories, like savings.

                Buy now, pay later programs can be super-convenient, but they also present risks. Our best advice? Use with caution.

                5 Steps to Take Before Making a Large Purchase

                Bitten by the gotta-have-it bug? It could be a Peloton bike that’s caught your eye, or maybe you want to spring for a new entertainment system? Before you go ahead with the purchase, though, it’s wise to take a step back and follow these steps.

                Step 1: Wait it out

                Often, a want can seem like a must-have, but that urgency fades when you wait it out. Take a break for a few days before finalizing a big purchase to see if you really want it. For an extra large purchase, you can wait a full week, or even a month. After some time has passed, you may find that you don’t want the item after all.

                Step 2: Consider your emotions

                Before going ahead with your purchase, take a moment to identify the emotions driving the decision. Is this purchase being used as a means to fix a troubled relationship? Or maybe you’re going through a hard time and you’re using this purchase to help numb the pain. Be honest with yourself and take note of what’s really driving the purchase. Is it really in your best interest?

                Step 3: Review your upcoming expenses

                What large expenses are you anticipating in the near future? Even if you have the cash in your account to cover this purchase, you may need that money soon for an upcoming expense. Don’t spend money today that you’ll need tomorrow.

                Step 4: Find the cheapest source for this item

                If you’ve decided you don’t want to go ahead with the purchase, there are still ways to save money. In today’s online world of commerce, comparison-shopping is as easy as a few clicks. You can use apps like ShopSavvy to help you find the retailer selling the item at the best price.

                Step 5: Choose your payment method carefully

                Cash can be your go-to choice if you have the funds on hand now. A low-interest credit card may offer purchase protection, just make sure you can meet your monthly payments. Finally, a buy now, pay later program can be just what you need if you have 25% of the purchase price saved up and you can afford to pay off the rest in fixed installments.

                If you’re ready to make a large purchase and need a loan, contact Olean Area Federal Credit Union to explore your options!

                When Should I Do It Myself and When Should I Leave it to the Pros?

                Q: Which home improvement projects can I tackle myself, and when should I leave it to the pros?

                A: It’s tempting to want to do everything yourself, but it isn’t always the best choice. Here’s how to know when to do it yourself and when to hire professionals.

                Home improvement projects you can probably do on your own

                • Cosmetic improvements.This includes painting, wallpapering, wood staining, installing adhesive carpet tiles and replacing the hardware on cabinets and drawers. Check out tutorials on YouTube for useful tips, tricks and hacks.
                • Minor plumbing jobs.Almost anyone can snake a clogged toilet, and most people can handle fixing a minor faucet leak or changing a shower head. Maybe even installing a toilet. Again, YouTube is your best friend when it comes to DIY adventures.
                • Minor electrical work.You can probably install new light fixtures and change your light switch plates without much issue.
                • Install tiles.Think a new backsplash for your kitchen, new tiles for your bathroom floors and walls, and new floors for your kitchen and foyer.

                Six questions to ask before tackling a project on your own

                1. Have I done a project like this before? If this isn’t your first time doing a project like this, you can probably handle it now.
                2. Do I have a reliable resource to turn to with any questions that may arise? It’s best to be prepared in case you run into trouble mid-project. Get that contractor friend on speed dial!
                3. Will this project involve any structural framing? It’s best not to tackle projects that involve cutting through walls without professional guidance.
                4. Will this job involve any electrical, plumbing or HVAC work? If your project involves cutting through pipes and wires, it’s best to call in the pros.
                5. Do I have the resources to complete this job? Make an estimation of how much the job will cost you in time and money before you begin.
                6. Will this job risk personal injury? Don’t risk your safety on a project that should really be left to the pros.

                Paying for a home improvement project

                A home improvement project can be expensive. Consider tapping into your home’s equity through a home equity loan or a home equity line of credit with Olean Area Federal Credit Union to help you pay for the project. Call, click, or stop by today!

                All You Need to Know About HELOCs

                If you’re a homeowner in need of some cash, look in your own home. You can tap into your equity through a home equity line of credit, or a HELOC. Let’s take a look at HELOCs and why they can be an excellent option for cash-strapped homeowners.

                What is a HELOC?

                A HELOC is a revolving credit line letting homeowners borrow money against the equity of their home, as needed. Since it’s backed by a valuable asset, a HELOC will generally have a lower interest rate than unsecured debt, like credit cards.

                Once you’ve been approved, you can borrow as much or as little as needed during a period of time known as the draw period. That time window generally lasts five to 10 years.

                How much money can I borrow through a HELOC?

                The amount of money you can take out through a HELOC will depend on your home’s total value, the percentage of that value the lender allows you to borrow against and how much you currently owe on your home.

                Many lenders will only offer homeowners a HELOC that allows the borrower to maintain a loan-to-value (LTV) ratio of 80% or lower.

                Is every homeowner eligible for a HELOC?

                Like every loan and line of credit, HELOCs have eligibility requirements. Exact criteria will vary, but most lenders will only approve homeowners who have a debt-to-income ratio of 40% or less, a credit score of 620 or higher and a home with an appraised value that is at minimum 15% more than what is owed on the home.

                How do I repay my HELOC?

                Some lenders allow borrowers to make payments toward the interest of the loan during the draw period. When the draw period ends, the borrower will make monthly payments toward the principal of the loan in addition to the interest payments.

                For many borrowers, though, repayment only begins when the draw period ends. At this point, the HELOC enters its repayment phase, which can last up to 20 years. During this time, the homeowner will make monthly payments toward the HELOC’s interest and principal.

                In lieu of an extended repayment phase, some lenders require homeowners to repay the entire balance in one lump sum when the draw period ends.

                How can I use the funds in my HELOC?

                There are no restrictions on how you use the money in your HELOC. However, it’s generally not a good idea to use a HELOC to fund a vacation, pay off credit card debt or to help you make a large purchase. If you default on it, you risk losing your home, so it’s best to use a HELOC to pay for something that has lasting value, such as a home improvement project.

                If you’re a homeowner in need of some extra cash, consider taking out a HELOC through Olean Area Federal Credit Union. Call, click, or stop by today to get started!

                What You Didn’t Know About Home Loans

                If you’re in the market for a new house, learn all you can about home loans before going too far into the process.

                Here are some things you may not know about home loans:

                Rates fluctuate daily

                If you’re looking for a new home, you may be checking mortgage rates as often as some people check their Twitter feeds, but rates fluctuate daily. Know that the rate you see today may be different than the one you actually get when you get approved for your loan.

                The cheapest interest rate does not guarantee the cheapest loan

                An adjustable-rate mortgages (ARM), which can be the loan boasting the lowest interest rate, may not have the lowest rate a few years down the line after it adjusts.  Understanding the terms of when you are subject to an interest rate change and what the limitations to those changes is important.

                A fixed-interest rate mortgage can ultimately cost you more

                A fixed-rate mortgage can have a higher interest rate, however it would not be subject to a future change later in your term. If rates drop further throughout your loan’s term though, you won’t be able to take advantage of the new rates unless you refinance. In the event that you wished to refinance, you may be subject to another set of closing costs.

                A lower credit score will cost the borrower

                A high credit score can translate into tens of thousands of dollars in interest payments saved over the life of a home loan. A credit score difference of 100 points can increase a monthly mortgage payment by $150 or more.

                The housing market impacts rates

                Lenders need to turn a profit from their loans, which means the higher the volume of loans they process, the less they need to earn from each one to remain profitable. When the housing market is booming, and lenders are granting loans on a frequent basis, they will be more inclined to offer lower interest rates to borrowers.

                You can have your mortgage payments automated

                Missing a mortgage payment or paying it late can have serious consequences. Avoid that by signing up to have your monthly mortgage payments automatically deducted from your checking account.

                If you apply for a home loan through Olean Area Federal Credit Union, and have a checking account with us, you can set up autopay for your monthly payment. Explore our mortgage loan options today!

                Saving on Home Renovations

                Is your home in desperate need of a facelift? As you probably know, home renovations don’t come cheap. In fact, the average kitchen remodel tops $60,000 and bathroom overhauls can cost $18,000!

                With some careful planning, though, you can shave thousands of dollars off these price tags.

                Here are 7 ways to save:

                1.       Don’t do a complete remodel

                Instead of knocking down walls, give the outdated area a fresh coat of paint, new light fixtures and some minor décor upgrades.

                Potential money saved: $30,000.

                2.       Shop around for a contractor

                Find someone professional, reliable and willing to give you a decent price. Check out at least three different contractors before making your decision. Ask for references and meet with each contractor in person to get a feel for their professional conduct and character. Also, be sure to sign a detailed contract.

                Potential money saved: several thousand dollars.

                3.       Consider long–term benefits

                It often makes sense to pay more now if it’ll save you big down the line. For example, if you’re installing clapboard siding, you’ll save in the long run by paying more for pre-primed and pre-painted boards. Using the prefinished boards means you’ll need half as many paint jobs in the future.

                Money saved: $1,250 (for a 10×40 area).

                4.       Pick decent but midgrade materials

                When long-term functionality is not a criterion, choose the midgrade option. One area where you’ll see this at play is in carpeting. Olefin and polyester carpeting will run you $1 to $2 per square foot, while wool costs upward of $9 to $11 per square foot.

                Money saved: $400 (for a 40-square-feet area).

                5.       Bring in natural light without windows

                Looking to bring a splash of sunshine into your kitchen? Instead of adding a window, consider installing a “light tube.” It slips between the rafters on your roof and works to funnel sunshine down into the living space below.

                Adding a double-pane window can run you $1,500; a light tube costs $500.

                Money saved: $1,000.

                6.       Lend a hand

                Save big by doing some of the demolition work yourself, painting some walls, or even sanding walls to prep them for painting. You can also lend a hand with the cleanup instead of hiring a crew.

                Money saved: $200 or more.

                7.       Increase efficiency, not size

                Cramped kitchen? Don’t assume you need to push out walls to make it work. Instead, reorganize your kitchen for optimal efficiency and save tens of thousands of dollars. Upgrade your cabinets with Lazy Susans, pullout drawers, dividers and more. Consider hiring a professional organizer to show you how to maximize your space — you’ll still save big overall.

                Money saved: up to $60,000.

                Before making any decisions, be sure to call, click or stop by Olean Area Federal Credit Union today to learn about our fantastic rates on Home Improvement Loans, Fixed Home Equity Loans and Home Equity Lines of Credit (HELOC)!

                Feeling Stuck in Your Car Loan? Might Be Time to Shop Around!

                Some bills can’t be changed. For other bills, though, a little legwork can make a big difference in your monthly payment. Your car payment is a great example. Refinancing your vehicle loan can lead to a lower monthly payment, a shorter payment term or both! It depends on various factors, including the value of your vehicle, how much you owe and your credit standing.

                Read on for three common life changes that might mean it’s a good time to refinance your vehicle.

                1.       Your credit rating improves

                One of the biggest factor determining your auto loan status is your credit score. When your lender builds a loan package, they pull a credit report as a central part of that process. That number can determine your interest rate, whether you’ll pay an insurance premium and what other fees your lender might charge.

                Keep a copy of the documents your lender provided regarding your credit score. That can allow you to revisit what it was to see if your credit score has improved. Nine months of steady repayment can boost your credit score, resulting in a less costly loan.

                If you didn’t have much credit history when you purchased, refinancing could do you a world of good. Interest rates as high as 18% are common for new borrowers. Just a few months of solid payments may cut that rate in half.

                2.       You didn’t shop around initially

                Many people feel railroaded throughout the car-buying process. They choose a car, and then are told the price, the monthly payment and everything else. It’s almost like the lender for your car loan is predetermined.

                Dealers usually have a smaller range of lenders with whom they exclusively work. Those lenders have limited exposure to competition, so they can charge higher fees and rates. Do your own comparison shopping. Dealer rates can be 1 to 1.5% higher than those offered at smaller lenders, like credit unions.

                If you’ve never shopped around for a car loan, it’s worth doing now. Do your shopping inside a 15-day period, though; multiple checks on your credit could negatively impact your credit score.

                3.       You need to change your monthly payment

                Your financial situation may have improved since you bought the car and you can now afford to pay more per month. You’ll save money in the long term by doing just that. Shorter-term loans usually have lower interest rates. Also, you’ll pay off the overall balance on your car faster.

                If money is tight, consider refinancing for a longer term. Although you’ll pay more in interest, you’ll reduce your monthly payment and save the money you need now. You may also be able to reduce the monthly payment if your credit score has improved, interest rates have dropped or if you’re getting a better rate from another lender.

                Contact Olean Area Federal Credit Union to find out how refinancing can improve your financial life!

                What do I Need to Know About Debt Consolidation?

                Q: Help! I’m drowning in debt! I’ve heard about debt consolidation, but what do I need to know before moving ahead?

                A: Debt consolidation is the process of moving multiple high-interest debts into a new loan or line of credit.

                Here’s what you need to know about debt consolidation.

                What are the benefits of debt consolidation? 

                Saving on interest payments. Moving your debts to a new loan or credit line with a low interest rate can translate into big savings.

                One monthly payment. Say goodbye to scrambling to keep track of and make all your monthly payments!

                Fixed payment timeline. How does knowing when you’ll be debt-free sound?

                Boost your credit score. Amp up your score with a balance transfer or loan.

                What are the disadvantages of debt consolidation? 

                May stretch out the payment timeline. More time in debt? No thanks.

                Won’t eliminate irresponsible spending habits. You won’t turn into a budgeting beast just because you’ve relocated your debt.

                Lower interest rate may not last. Many low- or no-interest credit cards only offer these features as a temporary promotion. Once time is up, the high interest rates hit. Ouch!

                How can I consolidate my debt?

                1. Unsecured loan — This will allow you to pay off all your outstanding loans immediately and move your debts to one low-interest loan.

                Unsecured loans usually have origination fees and other charges. Also, the interest rates on these loans can be sky-high.

                As a member of High Point Federal Credit Union, though, you have access to unsecured loans with lower interest rates than you’ll find at most banks. 

                • HELOC — Use your home as collateral for an open credit line.

                The drawback here is that you risk losing your home if you don’t pay up. Also, repayment terms can be upward of 10 years.

                On the flip side, interest payments on HELOCs will be affordable and possibly tax-deductible.

                • Balance transfer — Move your debt to a new credit card with a low interest rate or a zero-interest offer.

                The disadvantage with putting more plastic into your purse is that you may rack up a new credit card bill. Also, the low interest or no interest may not last.

                As a member of High Point Federal Credit Union, you can take advantage of our low APR credit cards to help you get out of debt quicker.

                * APR = Annual Percentage Rate. You can explore current deposit and loan rates by clicking here.

                Want to learn more about debt consolidation? Call us at 800.854.6052, or click here to send us a message.

                Top 10 Do’s and Don’ts for Personal Loans

                1.       Do use it to consolidate debt.

                Put all high-interest credit card debt and payday loans into one loan with a fixed rate, a fixed monthly payment and a closed-end term. You’ll save money and make debt management a lot simpler. Be sure to close any credit cards you pay off so you don’t rack up another large bill.

                2.       Don’t use it to pay for your college tuition.

                Instead, take out an education loan with the help of Olean Area Federal Credit Union.  Educational loans could potentially offer you alternative payment options, such as forbearances or income-based repayment terms.  Additionally, you could receive other benefits when filing your annual tax returns.

                3.       Do use it to finance renovations on your home.

                Be smart about your renovations, though, and only choose those that will increase your home’s value.

                4.       Do use it for moving expenses.

                Whether you’re moving cross-country for a job opportunity or another reason, a personal loan can help pay to transport your car, to move your belongings and to buy furniture for your new residence.  Be prepared to show proof of your new employment though, if applicable. 

                5.       Do use it to pay for hefty expenses.

                This would include large, unexpected expenses, like a funeral or adoption costs.

                6.       Do use it to foot medical bills.

                Especially for things that are not covered by most insurances such as fertility treatments, large dental treatments and cosmetic surgery.

                7.       Don’t use it to pay for everyday expenses.

                If you find yourself doing this, you may be in financial trouble and adding an additional monthly obligation may be more harmful than helpful. Speak to an Olean Area Federal Credit Union representative for help with debt management and general financial guidance.

                8.       Do use it to purchase a car or recreational vehicle.

                This could include an older boat or RV that may not qualify for vehicle financing due to the age of the item.

                9.       Do use it to take a dream vacation.

                Don’t do it twice a year, but a personal loan can help you finance your trip for a milestone anniversary or another special occasion that warrants an extravagant vacation.

                10.   Do use it to pay for a wedding.

                A personal loan would allow you to finance some or all the costs associated with getting married. 

                Are you ready to apply for a personal loan? Contact us today!

                Should I Refinance to a 15-year Mortgage

                With mortgage rates falling, many homeowners are rushing to refinance their 30-year mortgages into 15-year loans. Borrowers may be wondering if this is a financially sound move to make for their own mortgage.

                We’ve researched it and worked out the numbers for you so you can make a responsible, informed choice.

                When refinancing can be a good idea

                The primary attraction of a shorter mortgage term is paying off your home loan sooner, typically at a lower interest rate. Refinancing to a shorter-term loan makes the most sense when interest rates are falling.

                How much money can I save?

                Let’s assume you have a fixed 30-year, $300,000 mortgage with an interest rate of 4.5 percent.

                If you kept your existing mortgage unchanged for 30 years, you’d be making 360 payments of $1,520.06 a month, not including taxes, insurance and other fees. Over the life of your loan, you will have paid $247,220.13 in interest.

                Now let’s explore what these payments would look like if you refinance to a 15-year fixed-rate loan at a 3.5 percent interest rate.

                Over 15 years, you would make 180 payments of $2,144.65. Over the life of the loan, you’d be paying $86,036.57 in interest payments, affording you savings of $161,183.56.

                Remember: These numbers may or may not translate to your own situation. These savings are calculated over 30 years, but you may be nearing the halfway point of your mortgage. Refinancing at a lower rate may still be a good idea, but your interest savings will be much less than described above. Second, your rate may not be a full point lower after a refinance, as it is in our example. This, too, will bring less savings.

                What will a refinance cost?

                Expect to pay a minimum of 2.5 percent of your new loan in closing costs and other fees. Before you get started on the refinance process, it’s best to tally up these expenses and see what it would cost you to refinance.

                Also, your existing mortgage may have prepayment penalties. Find out about these fees before you set the refinance process in motion.

                When refinancing is not a good idea

                If you’re convinced that a 15-year refinance is right for you, first consider this crucial factor: Your monthly mortgage payments will increase significantly after a 15-year refinance.

                If you’re financially responsible, you won’t consider this move unless you are confident you can afford this increased mortgage payment each month. However, you may not realize that tying up your spare cash in your home’s equity can be risky. It can make more financial sense to build an emergency fund, increase your retirement contributions and pay off high-interest debt before refinancing.

                If you’re ready to make the move to a shorter-term loan, speak to a representative at High Point Federal Credit Union to learn about our fantastic home loan options.

                Are you looking to refinance? Check out current mortgage rates at High Point Federal Credit Union!

                Financing a Home Renovation with a Home Equity Loan

                Q: I’m doing some home renovations this spring and I’m not sure how to finance this expense. There are so many options! Which one makes the most sense?

                A: As a member of Olean Area Federal Credit Union, you have several options for funding a home renovation. You can open a HELOC, or a Home Equity Line Of Credit, which is an open credit line that’s secured by your home’s value for up to 10 years. You can also fund your renovations with an unsecured loan or use your credit cards.

                One of the best ways to fund a home renovation, though, is by taking out a HEL, or a Home Equity Loan. Let’s take a closer look at this popular loan option.

                What is a home equity loan? 

                A home equity loan is a loan secured by a home’s value. When homeowners open a HEL, they will receive a fixed amount of cash in one lump sum. Most home equity loans have a fixed interest rate, a fixed term and a fixed monthly payment.

                What are the advantages of a home equity loan? 

                The primary benefit a HEL has over other loans is its fixed interest rate. This means the loan will not be subject to increasing interest rates and borrowers know exactly how much their monthly payment will be for the entire term of the loan. Also, the interest paid on a home equity loan is often 100% tax-deductible (consult your tax adviser for details).

                Another benefit of the HEL is its repayment plan. Borrowers will be making payments toward the loan’s principal and interest throughout the term. At the end of the loan term, the entire balance will be paid in full.

                Are there any disadvantages to taking out a home equity loan?

                While a home equity loan offers the funds needed to cover a home improvement project with an affordable repayment plan, it’s important to know about every aspect of a HEL before applying.

                Obtaining a HEL could potentially include closing costs. It’s best to find out if there are any fees and, if so, how much these fees will amount to before applying for the loan.

                Also, when taking out a home equity loan, borrowers will receive their funds in one shot. This makes a HEL a great option for homeowners who know exactly what kind of work they will do on their homes. However, if they only have a vague idea about the renovations they want to do and how much they’ll cost, they may end up borrowing an insufficient amount.

                Finally, borrowers will need to make a monthly payment on their loan throughout its life. Before taking out a HEL, be sure you can afford the payments.

                Call, click, or stop by Olean Area Federal Credit Union to learn more about home equity loans and to start applying for your loan today.

                Five Steps to Take After a Financial Setback

                As we sail into 2021, many Americans are struggling with the aftershocks of financial setback. Whether it’s due to a layoff, a smaller workload, medical expenses or a change in family circumstances, the financial fallout of COVID-19 has been distressing.

                Recovering from a financial setback, due to a pandemic or any other reason, is never easy; however, with hard work and the ability to look forward, it can be done. Here’s how.

                Step 1: Assess the damage

                Evaluate exactly how much financial recovery you need. Are you thousands of dollars in debt? Do you need to find a new job? What are the long-term financial implications?

                Crunching the numbers and putting it all on paper will make it easier to take concrete steps toward recovery.

                Step 2: Accept your new reality 

                Shock and denial are valid stages of grief for any major loss or setback, but for recovery to be possible, it’s important to reach a place of acceptance. You can vent to a close friend, express your feelings in a journal, de-stress with your favorite low-cost hobby and then let go. Constantly harping on what could have been will only drain you of the energy you need to move on.

                Step 3: Outline your goals

                Clearly defining your goals will make it easier to go forward. Are you looking to rebuild a depleted emergency fund? Find gainful employment? Pay down your medical bills?

                As you work through this step, choose goals that are SMART:

                Specific

                Measurable

                Attainable

                Realistic

                Timely

                Step 4: Create a recovery plan

                Your plan should consist of consecutive steps that lead to a life of complete financial wellness. Here are some steps you may want to include:

                • Trim your spending until you can spend less than you earn.
                • Build a small emergency fund to help get you through an unexpected expense.
                • Seek new employment or new income streams.
                • Start paying down debts.
                • Save more aggressively, with one eye toward your retirement and another toward a large emergency fund with up to six months’ of living expenses.

                Step 5: Make it Happen

                Put your plan into action! If you were careful to set goals that are SMART, you should be able to take the first steps in your plan immediately.

                What Do I Need to Know About Today’s Real Estate Market?

                Q: What do I need to know about today’s real estate market?

                A: Trends and stats in real estate are constantly changing, especially during the unstable economy of COVID-19. Here’s what you need to know about the real estate market today.

                Is it a buyer’s market now? 

                Pickings are slim for homebuyers right now, giving sellers the upper hand and driving up prices for buyers. Low supply also means homes are on the market for less time than they would likely be in other years.

                If you’re in the market for a new home right now, it’s best to be prepared to change some of the items on your list of must-haves into nice-to-haves.

                What does low inventory mean for sellers? 

                An uneven balance of supply and demand that favors sellers means homeowners looking to sell may be able to get a higher price for their home than anticipated.

                Is home equity up? 

                According to the NAR , home prices have swelled to a national median of over $300,000. This makes it a great time to sell a home.

                If you’re selling your home, it’s a good idea to work with an experienced agent to ensure you’ll get the best possible offer for your home.

                If you’re planning to buy a home in this market of increasing home prices, work out the numbers and determine how much house you can afford before starting your search.

                Are interest rates still low? 

                Interest rates reached record lows in 2020 and economists are predicting  that low rates will continue through 2021.

                For buyers, this helps make homes more affordable; however, it’s important not to let a low interest rate make you think you can afford a home with a price tag that’s really outside your comfort zone.

                What do I need to know if I don’t plan to buy or sell a home soon?

                According to Freddie Mac , equity will likely continue rising in 2021. You may want to monitor how much your home is worth this year since you may change your mind about selling. Similarly, this can be a great time to tap into your home’s equity with a home equity loan or line of credit from Olean Area Federal Credit Union. You can easily explore our home equity loan rates by clicking here, and our line of credit rates by clicking here.

                If you’re interested in purchasing a home this year, check out our Mortgage Loan options, contact us for current rates, or click here to start applying for a loan today!

                Debt Consolidation: Not A Silver Bullet, But Still A Good Idea

                Using a personal loan to refinance your existing debt can make your debt more manageable. You’ll have one monthly payment at one interest rate instead of many smaller bills due on different days of the month.

                Will personal loans work for you?

                1. Have I fixed the debt problem?

                Think about why you’re in debt. If a medical bill, job loss or some other temporary hardship describes your situation, the fact that you have a job or have paid the medical bill means you’ve solved the problem that caused the debt in the first place.

                If, on the other hand, you accumulated debt by overspending on credit cards, a debt consolidation loan may not be the answer just yet. First make a budget you can stick to, learn how to save and gain responsibility in your use of credit. Getting a debt consolidation loan without doing those things first is a temporary solution that can make matters worse.

                2. Can I commit to a repayment plan?

                If you’re struggling to make minimum monthly payments on bills, a debt consolidation loan can only do so much. It’s possible that the lower interest rate will make repayment easier, but bundling all of that debt together could result in a higher monthly payment over a shorter period of time. Before you speak to a lender, figure out how much you can afford to put toward getting out of debt. Your lender can work backward from there to figure out terms, interest rate and total amount borrowed.

                If you’re relying on a fluctuating stream of income to repay debt, it may be difficult to commit to a strict repayment plan that’s as aggressive as you like. You can still make extra principal payments on a personal loan, so your strategy of making intermittent payments will still help. You just can’t figure them into your monthly payment calculation.

                3. Is my interest rate the problem?

                For some people, the biggest chunk of their debt is a student loan. These loans receive fairly generous terms, since a college degree should generally result in a higher-paying job. Debt consolidation for student loans, especially subsidized PLUS loans, may not make a great deal of sense. You’re better off negotiating the repayment structure with your lender if the monthly payments are unrealistic.

                On the other hand, if you’re dealing with credit card debt, interest rate is definitely part of the problem. Credit card debt interest regularly runs in the 20% range, more than twice the average rate of personal loans. Refinancing this debt with a personal loan can save you plenty over making minimum credit card payments.

                4. Will a personal loan cover all my debts?

                If you have more than $50,000 in credit card debt, it’s going to be difficult to put together a personal loan that can finance the entire amount. It’s worth prioritizing the highest interest cards and consolidating those instead of trying to divide your refinancing evenly between accounts. Get the biggest problems out of the way, so you can focus your efforts on picking up the pieces.

                Debt consolidation doesn’t work for everyone, but it can do wonders for many people. The ability to eliminate high-interest debt and simplify monthly expenses into one payment for debt servicing can change a family’s whole financial picture. Gather your account statements and your paycheck stubs, and contact High Point Federal Credit Union today!

                When and Why to Take on Business Debt

                Taking on debt, such as a loan or a line of credit, can provide a business with the cash it needs to expand or fund a new venture. Here’s what you need to know about when and why it can make sense to take on business debt:

                When is it a good idea to take on business debt?

                When seeking resources to help grow the business. It takes money to make money, and a small business loan can help business owners pay for an expansion when they don’t have the resources to fund it on their own. The funds can be used to broaden the company’s line of products or services, finance a move to a larger location, fund a marketing campaign or hire additional staff.

                When trying to build credit. Taking out a small loan or opening a new line of credit can be a great way to build a credit profile for a business and to strengthen its relationship with financial institutions. Small loans and lines of credit can help a business prove it is responsible and trusted to repay its debts. This will open doors to larger loans that may be needed in the future.

                Why is debt often a preferred source of funds?

                Here’s why debt can be a preferred source of funds for a business, as opposed to selling equity in the company:

                It has lower financing costs. Unlike equity, debt is limited. Once the loan is paid back, the business owner can forget it ever existed. On the flip side, selling equity in a company generally means forking over a part of the profit for as long as the business exists.

                It provides tax advantages. Business debt can decrease a company’s tax liability by lowering its equity base. As an added bonus, interest on business loans and lines of credit are usually tax-deductible.

                It mitigates risk. Taking on debt to access funds instead of selling equity lowers the company’s risk in the event that the business does not succeed.

                If you’re ready to take out a business loan or open a new line of credit for your business, we can help! Call, click, or stop by Olean Area Federal Credit Union today to secure the funds you need to grow your business.

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