Building interest in loans
Published: Thursday, February 6, 2014
Updated: Thursday, February 6, 2014 23:02
How many people actually know anything about banks and loans? We, students, deal with loans every year. Some of only take out what is necessary, while others may take out extra to cover certain expenses. Unfortunately, the undeniable truth is that we will have to pay back every penny…with interest.
A lot of people cringe when the topic of interest comes about, and sometimes for good reason because there are some companies out there who like to take advantage of students. Luckily, most banks are on our side. If you have a checking or savings account with a bank then it’s crucial that your money is still there and that you accrue interest with your savings. Interest from loans is what does that. “I’ve always had a savings account but never once gave a thought about how the interest got there,” said Justin Martin, student at Tennessee Tech.
Employee of First National Bank, Brandon Reeves sat down with me and talked about some of the ins and outs of how loans work. Reeves said, “When a bank gives out a loan to an individual, it’s like the bank is investing in that person.” The money that a bank gives out for loans is the same money that we put in our checking and savings accounts. “Probably the best representation of this is in the movie ‘It’s A Wonderful Life.’ In the movie when they want their money, the bank isn’t able to give it back because it’s tied up in loans that people haven’t paid back yet.” That being said, I completely understand why banks have to be on their toes about whom they give out loans to.
TTU student, Larry Baker said, “I like to think I’m pretty good about paying off my loans. I always pay more than the minimum balance so it’ll get paid off quicker.”
When speaking with Mr. Reeves I also found out that your credit score is not the only reason you get or get turned down for a loan. They do an extensive check on your credit report and work history. “Chances are if you pay your bills on time and pay off your bills, your credit score is just fine,” said Reeves.
Mr. Reeves also filled me in that if you’re looking to check your credit score, creditkarma.com is a legit, free website that doesn’t ask for a credit card.