Posted on: 17 December 2017
When it comes to making a large purchase or paying off debt, most people do not have the money upfront. Because of this, consumer loans are often used for these expenses. Over the course of a person's life, there is a very good chance that they will require at least one consumer loan. These loans are available through banks and other lenders. Consumer loans are available in varying amounts depending on the loan seeker's financial history and income. Here are a few things to know about consumer loans.
There Are A Variety Of Loans To Choose From
When it comes to consumer loans, multiple types of loans fall into this category. Auto loans, mortgages, personal loans, home equity lines, credit cards, and even student loans are all types of consumer loans. Auto loans, mortgages, and student loans have specific purposes. However, personal loans, credit cards, and even home equity lines can be used for a variety of purposes. For those who need to either consolidate their debt, renovate their home, or make a large purchase, personal loans, credit cards, and home equity lines are often the best options.
Different Ways To Pay It Back
Another thing to know about consumer loans is that there are different ways to pay them back. Installments are the most popular option. They allow the loan to be paid back over a designated amount of time. Payments are most often monthly and are the same amount each time. Another type of loan is a time loan. In this case, the loan is repaid in full within a designated time period. This is often used as a stop-gap until another form of financing is approved. Credit cards and lines of credit can vary in their payment structure depending on how much credit is used.
Interest Rates Vary
When looking into consumer loans, it's important to know that interest rates can vary greatly depending on the type of loan as well as a person's credit score. The average interest rates for a personal loan range from 10 percent to 28 percent while the average interest rate on a credit card is 15.07 percent. Interest rates for mortgages typically hover around 3 and 4 percent, but a good credit score can lead to an even lower rate. The best course of action is to choose a consumer loan that offers the borrower the best interest rate possible.
Consumer loans are essential for most people when it's time to make a big purchase. There are a variety of loans to choose from as well as different options for paying the loans back. Interest rates can vary, so it's important to shop around.Share