Workplace Banking Quarterly Newsletter 3Q21

FINANCE YOUR NEXT CAR WITH AN AUTO LOAN TAILORED TO YOUR NEEDS

Car shopping can be stressful. But with First Merchants, choosing the right auto loan is simple. Whether you’re searching for a dream car, a family hauler or something in between, you have options.

To save yourself time and frustration, we recommend taking a few steps before you leave for the dealership. These steps will help you find a vehicle you can afford and ensure the process goes as smoothly as possible.

Calculate how much car you can afford. To start out, we recommend using an auto loan calculator to determine your budget. The purchase price of a vehicle is based on various factors, including down payments, rebates, taxes and the value of a trade-in vehicle, if you have one. This calculator provides a rough estimate of how much you can afford.

Learn the language. While you’re looking for an auto loan, it’s helpful to understand the terminology.

• Annual percentage rate (APR): any interest and certain lender fees, also known as finance charges, for the money you borrow.
• Down payment: The lump sum amount you can afford to pay upfront toward the car’s price.
• Loan term: The length of time you have to pay off your auto loan. Loan terms typically range from 12 to 60 months, depending on the specifics of your loan.
• Taxes and fees: The sticker price on vehicles often doesn’t include additional costs, such as state and local sales taxes, documentation fees and other dealer charges.

Apply for a loan. Once you understand roughly how much you can afford, you’re ready to apply for an auto loan. Before you apply, make sure you have the required documentation prepared. This generally includes identification, proof of income, credit and banking history, proof of residence, registration for your current vehicle, if applicable, proof of insurance and details about your method of down payment. Once you have all this information prepared, contact your lender. First Merchants offers an easy online application or you can apply in person at one of our banking centers.

Through our Refer a Friend program, you can also earn money by referring friends and family for auto loans. If someone you refer opens and funds a new auto loan worth at least $5,000 within six months of your referral, you’ll earn a $50 Mastercard Reward Card. The more friends you refer, the more you can earn. Register for the program today to get started.

Learn more about auto loans online or by visiting one of our banking centers.

CHOOSING THE RIGHT LENDING OPTION FOR YOUR GOALS

Home equity lines of credit, home equity loans and cash-out refinancing all have their own distinct benefits. But distinguishing between the options and choosing the right loan depends on your specific circumstances. The one thing all these options have in common is that they allow homeowners to tap into the equity they’ve generated through mortgage payments.

If you need a lump sum of cash all at once to cover a major expense, such as a wedding or remodel, then you might consider a home equity loan. Or if you’re in need of supplemental cash, you can apply for a home equity line of credit (HELOC), which allows you to borrow money as you need it. For individuals in need of extra money who are also looking to refinance their home, a cash-out refinance could be a good option.

Learn more about your options through our in-depth primer on home equity lending.

TAKE ADVANTAGE OF FIRST MERCHANTS FIRST DIRECT CHECKING

First Merchants First Direct Checking is an account exclusively for employees of participating businesses, first responders, members of the military and those who work in the healthcare or education field.¹ As an employee of a participating company, you can open a First Direct checking account with no minimum balance requirement and no opening deposit with direct deposit sign-up.

First Direct also earns interest starting at $2,500,² offers free official checks and money orders, provides discounts on various services and more. Start taking advantage of this account today!

Visit firstmerchants.com/personal/checking/first-direct to learn more or call 1.800.205.3464.

CREDIT MISTAKES TO AVOID

Your credit score is one of the most important factors representing your financial well-being. It influences how much you can borrow to cover both major and minor expenses, so it’s in your best interest to keep your credit score as high as possible.

Your credit represents how well you’ve managed your debt. When you’re looking to borrow money for a significant purchase, such as a home or auto, lenders will closely analyze your credit to determine if you’re a trustworthy borrower. To set yourself up for success, here’s a rundown of the four most common credit mistakes to avoid.

Maxing out your credit cards. Credit cards are an excellent tool for building credit and paying for everyday expenses. But if you mismanage your credit cards, they can also quickly damage your credit and generate high interest fees. Maxing out your credit cards will also likely deter lenders from approving you for future lines of credit, because it can signal that you’re mismanaging your finances.

Making the minimum payment on your credit card. Even though credit cards offer a minimum payment, we recommend avoiding it. With interest rates as high as 30%, credit card debt can quickly become unmanageable. Carrying a high credit card balance also impacts your credit utilization ratio, which is a representation of how much you owe compared to your credit limit. Credit utilization ratio, also sometimes called the credit utilization rate, is an important factor that lenders examine when assessing your credit history.

Missing payments. Missing payments and making late payments should be avoided at all costs. Paying your debts behind schedule can dramatically decrease your credit score. Missing payments also often come with penalty fees. This applies to all debts, including credit cards, mortgages, auto loans and utility bills.

Applying for too many loans and lines of credit. Each time you apply for a new loan or line of credit, lenders check your credit report. This review often automatically lowers your credit score by a few points. This reduction is negligible if you have good credit, but repeated credit checks can accumulate and significantly decrease your credit score over time.

If you have any questions about credit, we’re here to help. Reach out online or visit one of our banking centers to learn more.

HOW TO MANAGE A HOUSEHOLD ON A BUDGET

The importance of maintaining and managing a household budget can’t be overstated. Following a budget can help you achieve both short - and long-term goals. Fortunately, there are plenty of resources for building a household budget, including our online budget calculators. These calculators can help you track household spending, balance a checkbook, monitor cash flow, calculate your net worth and even determine whether you should be saving or paying off debt.

Our Personal Finance platform is a one-stop shop for all of your financial accounts, including accounts at other financial institutions. Visit our website to sign up for our Personal Finance platform and learn more.

SCAM ALERT

First Merchants will never ask for your username or password to your accounts. Scammers can use sophisticated tactics to make calls and messages that appear to be coming from First Merchants and ask for your personal information. If you’re targeted by a suspected scam, ignore the message or hang up, and call First Merchants Customer Service at 1.800.205.3464 right away. We can help scope out fraud and verify legitimate communications when you have concerns.

¹First responders include police, firefighters and paramedics. Military includes active members and veterans of the Army, Navy, Marine Corps, Air Force, Coast Guard and National Guard.Educational workers include any employee of a school system. Healthcare workers include physicians, nurses, emergency medical personnel, dental professionals and students, medical and nursing students, lab technicians, pharmacists, hospital volunteers, therapists and administrative staff.

²Interest tiers starting at $2,500. Interest is accrued daily and credited monthly.