Unfortunately, loans in America has become something of a habit, like smoking, coffee in the morning, or a glass of wine in the evening. And the main disadvantage of the habit is that it is difficult to part with it. Of course, it is possible that smokers quit cigarettes even after twenty years of daily smoking. But it won't be easy. Moreover, our economy loves when we take loans and encourages us to do it in every possible way.
In general, loans should be taken only when you are sure you can repay them on time. It is always worth asking yourself the question: "how will I make payments if I lose my job tomorrow?". And if you have a backup plan of repaying them on time, then you can get a loan. If not, think twice and better not, especially if it's not something critical, like paying medical bills.
A personal loan is a financial product that can provide you with a fairly large sum. You will pay it in regular payments over a specified period.
When you take out a personal loan, you can get from $5,000 to $50,000. Terms can vary from 12 months to 64 months, sometimes even more.
Personal loans are often attractive because of their low-interest rates, which make them a good idea, together with the possible loan amount and the long repayment period.
But people with bad credit histories need to be careful. For example, some lenders do not give personal loans at all to those whose credit score is below 680. And those that do raise the interest rate significantly, sometimes quite significantly, for example, from 8% to 15% or higher per month.
People take out personal loans for various needs, including new purchases and vacations. But it is better not to abuse borrowed money. Instead, turn to a personal loan when you need to fix your house or car (if it can't wait until you save up for it), pay medical bills, or arrange a funeral. You can take out a personal loan if your refrigerator is broken and can no longer be fixed. But if you just want to upgrade your TV to a model with a larger diagonal, it's better to wait and save the necessary amount.
A mortgage is a loan that involves the purchase of the real estate. Mortgage money cannot be spent on anything other than the land, house, or apartment under which you took out a mortgage.
The amounts of mortgage loans are huge, but so are the terms - most often, mortgages are given for 5 or 15 years, but there are also those whose terms reach 40 years (typical for larger amounts). Mortgage interest rates range from 4% to 7% but may vary depending on the lender and your credit history.
To qualify for a mortgage, you will have to go through serious underwriting. Lenders need to ensure that you will be able to pay off the debt.
It can take years to save up for your own home. And if you have the opportunity to live for free, for example, with your parents, and this is a comfortable option for you, then you should consider it. On the other hand, if you live in a rented apartment, you can consider a mortgage option. So you will invest in your own home, not someone else's.
An auto loan is a financial product that helps you buy a vehicle. This is not always just a car, and it can also be a motorcycle, boat, yacht, or motor home.
The amounts of these loans vary, as do the terms, depending on the value of your purchase. The most popular auto loan repayment terms are 24, 36, 48, 60, 72, and 84 months. Interest rates can vary from 2.83% to 36%.
Just like with a mortgage, auto loan money cannot be spent on anything other than a vehicle. In addition, it will act as collateral, and in case of non-payment of the loan, you can lose it. Often, auto loans are also provided for used cars and other vehicles.
In fact, a car is a means of transportation that can be replaced by a bus, tram, subway, or another form of public transport. So, you will save money, and not only on buying a car but also on its maintenance, repair, refueling. Buying a car, especially on credit, is worth it only when it is the only way to get from your home to work, a store, or a hospital.
A payday loan is a way to get a small amount of money quickly. Perhaps this is the main advantage of such a loan product. It does not require collateral, and you can receive the money on the day you apply for a loan or the next day. Unfortunately, interest rates on payday loans are high and vary from state to state. They can be from 36% to 400%.
Payday loan terms are usually 14 days or a month. The available loan amount usually does not exceed $1,000. You can’t repay the loan in monthly installments - you will need to repay the entire loan amount with interest and fees.
Get a payday loan exclusively in emergencies. When you need money urgently and can’t borrow a personal loan, a payday cash loan is your option. And only if you are firmly convinced that you will be able to repay the debt at the end of the loan term.
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