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Extraco Banks
Waco Temple

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Understanding Loans

Learn about all kinds of loans and how they work.

A loan gives you access to the cash you need today and lets you repay those funds over a period of time.

In exchange for this convenience, the financial institution will charge interest for the duration of the loan. Used wisely, it may help you achieve your goals sooner.

Browse our resources to understand your responsibilities as a borrower.

Managing Debt

How much debt is too much? Realistically, understanding your monthly income and expenses is key to defining how much more debt is prudent. Once your budget is established, the remaining money left over is called your disposable income. Your disposable income is a key factor to consider when evaluating special purchases and savings.
 
Key Considerations:

  • If you are only meeting your monthly bills, an unexpected expense could mean a serious financial setback
  • It’s a good idea to establish an emergency fund when setting up your budget
 


Loan Applications

When you apply for a loan, we review your application information to help determine your credit worthiness.
 
Key Considerations:

  • Your credit score tells us your past performance in meeting your financial obligations
  • Your credit report shows stability as well as borrowing behaviors 

Sometimes a person has a limited credit history which makes determining credit worthiness a bit more challenging. Therefore, we may also consider additional information to help us make a sound decision:

  • Management of your checking account
  • Whether or not you have sufficient funds in your savings to sustain an emergency
  • Collateral or security on the loan
  • Net worth
  • Job and residence stability
 

Borrower Responsibilities

When you take out a loan, you enter into a legal contract with the lender. This contract makes you liable to repay the obligation as set forth in your loan agreement.
 

What happens if you can’t make a loan payment?

  • Contact us immediately to explain your dilemma 

What are the consequences of ignoring loan obligations?

  • The creditor may take possession of the security pledged on the loan
  • Your financial institution may call the loan due payable in full in event of default
  • Your credit rating may be negatively affected which could harm your future credit worthiness.
  • Credit quality may be utilized to determine insurance premiums and employers may evaluate credit as part of their hiring process.


Calculating Net Worth

Your net worth is the amount by which your assets (what you own) exceeds your liabilities (what you owe). It’s a lifetime scorecard used to measure your financial health.
 
Your net worth should increase over time as you grow older and begin to pay down debt while increasing your assets. Reviewing your personal net worth annually can help you meet your financial net worth.