Know Before You Borrow:
An Informed Loan Decision Crucial for Ohioans

By Patrick Harris
Director of Media and Public Relations
Ohio Credit Union League
800-486-2917, ext. 212

CONSIDER THIS: Auto research firm Polk forecasts that new vehicle registrations in the U.S. will increase by 900,000 in 2013. According the Ohio Credit Union League year-end survey, Ohioans will contribute to that number.

The report revealed 12.5 percent of respondents plan to purchase a car in 2013. Additionally, 7 percent are planning to purchase a house this year. As more consumers make major purchases, the demand for affordable loans will rise. How can consumers take action to save on financing costs and find the most affordable loan?

According to the survey, many Ohioans planning to purchase a car or home have taken steps to prepare. Fifty percent of respondents indicated they would use money from savings for a down payment on a car, and 62 percent on a house.

While the current market offers favorable rates, says the best options are usually only available to borrowers with “tier one” credit, which generally requires a credit score ranging from 760 to 850. Consumers outside of tier one may find themselves paying more than necessary for their loans.

From an Ohio credit union leader’s perspective…

According to Barry Shaner, CEO of Toledo-based Directions Credit Union, consumers need to pay attention to more than just the monthly payment and interest rate of a loan.

“It is important to consider the overall costs of a loan,” he explains. “Ask questions before signing on the dotted line, and if something does not seem right, it may be best to walk away.”

Shaner suggests consumers ask questions about taxes, fees, insurance requirement, and closing costs before signing any loan documents.

The Financial Five…

Before making a large purchase, consumers should…

  1. Check your credit history. Your credit union can provide you with a copy of your credit report. You can also get a report each year for free at Check your report for inaccuracies, and look for areas to improve. If you have existing balances, consider paying them down to lessen your debt-to-income ratio, a big factor in your credit score.

  2. Shop around for the best financing deal. Consider the entire financing package when shopping for a loan. Calculate the cost of the loan through its entire term and include up-front charges, taxes, and fees. You may find a low-interest loan without fees costs less than a zero-percent-interest loan with fees.

  3. Put money down. If possible, take the time to save up for a down payment. The more money you put down, the less you have to finance, saving you thousands of dollars in interest charges. This can also allow you to pay for any loan costs up front, rather than rolling them into your monthly payment.

  4. Adjust your monthly budget. Adding a new loan payment can put a dent in your monthly budget. Bills that you typically paid in the middle of the month might need to be moved, possibly subjecting you to late fees. Try budgeting an estimated mortgage or car payment a couple of months in advance to avoid the shock.

  5. Ask questions. The more you ask, the better informed you are. Sit down with a consumer lending specialist at your credit union and ask: how much house/car can I afford? What fees/charges are avoidable? What interest rate can I expect to pay? How much should I put down? In the end, how much will the loan cost me?

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