Understanding the basics of lending is essential to building a strong financial foundation. Whether you're considering a personal loan, auto loan, mortgage, or home equity line of credit, knowing how to borrow wisely can help you reach your goals without compromising your financial health.

This guide walks you through the basics of lending so you can make informed decisions and take full advantage of the options available to you.

What Are the Basics of Lending?

Loans are financial tools that allow you to access money now and repay it over time, usually with interest. Before applying for a loan, it’s important to understand the key components of borrowing money from a credit union.

The basic lending factors include:

  • Principal – The amount you borrow
  • Interest rate – The cost of borrowing, expressed as a percentage
  • Term – How long you have to repay the loan
  • Monthly payment – The amount you pay each month, including interest

Sentry Credit Union offers clear, competitive lending terms with no hidden fees, so you always know what to expect when applying for and repaying your loan.

How to Tell Which Loan Is Right for You: Different goals call for different types of loans.

Here’s a quick overview:

  • Personal Loans – Great for consolidating debt, covering unexpected expenses, or funding major purchases
  • Auto Loans – Designed for buying new or used vehicles, often with lower rates for members
  • Home Loans & Mortgages – Help you purchase or refinance a home with flexible terms and local support
  • Home Equity Loans & HELOCs – Use the value of your home to fund renovations, higher education, or other significant expenses

Sentry Credit Union offers personalized guidance to help you choose the loan that fits your needs.

What Affects Your Loan Approval?

Lenders look at several factors when reviewing your loan application:

  • Credit score – A higher score often means better rates and easier approval. At SCU, however, you always get our best rate, regardless of your credit score.
  • Income and employment – A steady income shows you can repay the loan
  • Debt-to-income ratio – A lower ratio means you’re not overextended
  • Collateral – For secured loans, assets like your car or home may be used as backing

Sentry Credit Union offers tools and support to help you strengthen your credit and prepare for loan approval.

What Goes Into the Full Cost of a Loan?

The full cost of a loan considers more than your monthly payment. Understanding the full cost of borrowing helps you make smarter choices.

  • Annual Percentage Rate (APR) – Includes interest and fees
  • Total repayment amount – What you’ll pay over the life of the loan
  • Prepayment penalties or fees – While some lenders may fine you for paying off your loan early, at SCU there are never any prepayment penalties or fees.

Use SCU’s loan calculators to estimate payments and compare options before you commit.

Borrow with Confidence at Sentry Credit Union

As a member, you have access to fair, transparent lending and personalized support. Whether you're applying online or visiting a branch, our team is here to guide you through the basics of lending and every step along the way.

✓ Competitive interest rates

✓ Flexible repayment terms

✓ No hidden fees

✓ Local decision-making and member-first service

We also offer financial counseling to help you understand your options and build a borrowing strategy that supports your long-term goals.

Smart Borrowing Is Empowered Borrowing

Living your best financial life means borrowing with purpose, clarity, and confidence. At Sentry Credit Union, we’re here to help you understand the basics of lending so you can make informed decisions, avoid unnecessary debt, and use loans as a tool to build the future you want.

Ready to get started? Schedule a financial check-in with a SCU representative today.