Understanding Loans: What to Know Before You Borrow

Loans can be a smart tool for managing your finances. Understanding how they work, from the amount you borrow to how you pay it back, is a great way to set yourself up for success. This blog explains the essentials so you can make confident decisions that support your financial future.

How Loans Work

A loan is money you borrow and agree to pay back over time, usually with interest. The amount you borrow is called the principal, and interest is the cost of borrowing that money. As you repay the loan, the principal balance decreases over time until it is paid in full.

Loans can be used for different things, like financing important purchases, consolidating debt or covering unexpected expenses like medical bills. The loan that’s best for you depends on your unique goals.

Repaying Your Loan

Most loans are repaid in monthly installments that include part of the principal and interest. Your total monthly payment depends on:

• The amount of money you borrow
• The interest rate of the loan
• The length of the loan

Our loan calculators make it easy to estimate your monthly payment, and exploring your options can help determine how much you’d like to borrow.

Qualifying for a Loan

Before you can borrow money, you need to apply for a loan. When you apply, we take a look at:

• Your credit score (To see how you’ve managed loans in the past)
• Your income (To determine your ability to repay the loan)
• Your debt-to-income ratio (To estimate how much of your income already goes to loans)
• The purpose of the loan (To understand how the loan will be used)

Don’t be discouraged if your credit isn’t perfect. At Rogue Credit Union™, we look beyond the numbers to understand your full financial picture, offering solutions to help you qualify and improve your credit over time.

A Team You Can Trust

One of the great advantages of working with a credit union is the relationship you build with us. When you apply for a loan, we’ll listen to your concerns, answer your questions and explain your options in a way that makes sense. Our goal is to work alongside you, helping you make informed decisions today that strengthen the financial well-being of your tomorrow.

Talking with a Member Service Representative can make the lending process clearer, less stressful and even empowering. Send us a chat, call 800.856.7328 or visit your local branch to get started.