GCTFCU Blog | Credit Union Terms

Credit Union Terms

A credit union is a financial cooperative that is created, owned and operated by its members. It provides credit at competitive rates in addition to a plethora of financial services to its members.

Following is a list of some terms that are commonly used in credit unions:

Account Agreement: The agreement that determines membership eligibility, conditions for share accounts and other banking operations.
Accrued Interest: Interest that is due but has not yet been paid to an account holder of a share account. It can also be due interest that has not yet been paid to the credit union by borrower of a loan.
Adjustable-Rate Mortgage: A mortgage without a fixed interest rate. The rate fluctuates on the basis of market conditions such as index rate.
Annual Percentage Rate: Percentage indicating the cost of credit on a yearly basis.
Annual Percentage Yield: A percentage indicating the total amount of interest paid on a share account. The amount is based on the interest rate and frequency of compounding for the year.
Annuity: Life insurance contract sold by brokers, insurance companies and other institutions as retirement investment.
Automatic Bill Payment: An automated system for an account holder to pay recurring bills.
Available Credit: The remaining amount of funds in a line of credit or account that a member can borrow.
Closing Costs: Expenses incurred by sellers and buyers when transferring the ownership of property.
Collateral: Assets offered by a borrower for securing a loan or some other form of credit.
Drawer: A person/entity who writes a check or draft asking the drawee to pay another.
Drawee: The credit union or financial institution expected to pay a check or draft that is presented for payment.
Escrow: The act of holding money or documents by a neutral third party prior to closing the property.
Foreclosure: Legal process of selling property and using the proceeds for covering a mortgage debt.
Open-End Credit: A credit agreement allowing members to borrow against pre-approved credit line for purchasing goods and services.
Overdraft: When the amount in an account falls short of the amount being withdrawn from a checking account or share draft account.
Payee: A person or organization to whom a check, draft or note is made payable.
Payoff: Complete repayment of a loan.
Share Draft Account: Checking accounts are called share draft accounts by credit unions. They are transaction accounts.
Uncollected Funds: A part of a deposit balance that is due to be collected by the depository financial institution.

For more information, visit Greater Central Texas Federal Credit Union at 3305 E. Elms Rd., Killeen, TX-76542 or call at (254) 690 – 2274.

Important Questions To Ask When Getting A Car Loan

When you are looking to get an auto loan, it is important to go to multiple lenders as each will offer different mortgage products. In order to get the best finance deal for your car, make sure you ask lots of questions. The questions could range from simple ones such as what model of the car to buy and go on to complex ones such as credit history etc.

Below is a list of certain important questions that you need to ask when getting a car loan:

Q: How much can I afford?
Getting a new car can be a great addition to your assets. However, you need to sort out your finances well in advance before embarking on this purchase. Take a good look at your monthly expenses and other loan repayment amounts before arriving at the decision of buying a new car. Make a detailed list of your monthly budget and think how you are going to cut off unnecessary expenses in case you buy a new car.

Q: What interest rate I need to pay?
Every credit union will offer you varied rates of interest that can change on a daily basis. However, one of the most important deciding factors for concluding the interest rate that you will be offered is credit history. All the loan options and fees will be decided based on your credit score. Apart from this, there are many other factors such as loan term, the model of the car you are buying and down payment are also taken into consideration while finalizing the interest rate.

Q: Are there any penalties on my loan?
Before getting an auto loan, you need to confirm from the credit union if repaying your loan earlier than the stipulated time period can fetch you some penalty. Also, make sure you ask about any extra charges or fees that you may have to incur during your loan term. It is important to be clear about any hidden charges so that you are not taken aback by any surprise later on.

Q: Should I opt for fixed or variable rate of interest?
If you opt for a car loan with a fixed rate of interest, your repayment amount as well as interest rate will remain constant throughout the loan term. On the other hand, a variable rate of interest will keep on changing making your repayment amount increase or decrease during the loan term. This can affect your budget as you will not know what rate of interest you will be required to pay every month. Depending on your financial situation, choose a suitable option.

Q: Do I need extra protection apart from insurance?
It is important to have car insurance if you want to legally become the owner of a vehicle. However, it is up to you to decide if you want to have comprehensive car insurance to add more protection. It is best to talk to your lender and discuss your insurance requirements.

Apply for cheap car insurance at Greater Central Texas Federal Credit Union. To know more about the financial services provided, feel free to call at (254) 690 – 2274.

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