Mortgages And Modern Types Of Loan

A family are shown sitting in their yard of their home
Information About Credit And Loans In The USA
Part 1 The Introduction Of Personal Savings And Loans In The USA
Part 2 The Bank Loan And Traditional Lending In The USA
Part 3 Mortgages And Modern Types Of Loan
Part 4 Applying For A Loan In The USA

Owning your own home is a dream for most people and unless you are already a millionaire, in order to make your dream come true, you will need to borrow money in the form of a mortgage or home loan. Applying for a mortgage is a complex process and a typical lender will require background credit checks, verification of employment, a history of where you have lived, details of your savings and any debts and confirmation that you can make the repayments. In this article we discuss:

  • Payday loans in the US
  • Home loans (Mortgages)
  • Car loans in the USA
  • Student loans

Like other forms of credit, the amount you can borrow on a home loan will depend upon your credit history and personal circumstances. The mortgage business is very competitive so it is wise to shop around for a good rate. Of course, you can try your own bank as a first stop and this makes the process less painful. Mortgages are available with fixed or variable rates and for terms of up to 30 years.

Payday Loans In America

Payday loans are an expensive form of borrowing but this kind of credit is only designed to be used for a short period of time. i.e. between 14 and 30 days.

Mortgages are available with fixed or variable rates and for terms of up to 30 years

The high interest rates make this type of loan a ‘last resort’ for most people. However, used responsibly and sensibly, a payday loan can help you when you have no savings and you need to make an essential payment. In the US each state has its own regulations pertaining to payday loans and these can be accessed using the links on this website.

Car loans

Car sales are responsible for 20% of the retail spending in the US and many of the vehicles are purchased using a car loan. At the end of 2016, figures published showed that there was $1.2 trillion owed in outstanding debt on cars. Total household debt is once again on the increase in the US and car loans make up a significant proportion of that debt.

Car finance covers vehicles bought with a straightforward loan, using hire purchase and personal contract hire or personal contract purchase. Finance is unsecured and can be provided through a bank or a specialist car finance business.

A woman and her son are shown in their new car

A car bought using a contract for hire purchase can be repossessed if the payments are not made on time. Vehicles bought using a loan cannot be taken back but any default will have a serious impact on your credit rating.

Student loans

Student loans are big business in the US. There are around 43 million people with student loans and the average amount owed is $30,000. Many big lenders offer this kind of credit and the repayment plans are standard unless you can organize an individual deal. A Federal direct loan for $30,000 and charged at 4% would cost you $6,448 in interest over a period of ten years.

There are around 43 million people with student loans and the average amount owed is $30,000.

You can also opt for an income based repayment plan where you pay a percentage of your income each month to repay the loan. In this case, the amount of interest will be lower if you earn a high salary as the loan would be paid off sooner. Therefore, even though you may want to opt for lower monthly payments, the total cost of the loan will be higher in the end if you choose this path. As with all kinds of credit it is important to keep the debt for the least time possible and this way you will not pay large amounts in interest.

Summary of credit types

These are the main types of credit products on offer in the US and this short summary only deals with the basics of each type of credit. It is important to consider all the options when borrowing money and before entering into an agreement make sure that you can afford the repayments. Next we will look at how loans work and some facts that will help you to decide whether you can afford to borrow and how much.

Information About Credit And Loans In The USA
Part 1 The Introduction Of Personal Savings And Loans In The USA
Part 2 The Bank Loan And Traditional Lending In The USA
Part 3 Mortgages And Modern Types Of Loan
Part 4 Applying For A Loan In The USA

About the author

David Warren

David Warren is an expert on personal loans across the United States. His career in banking has helped make David the loans specialist that he is today. He shares his analysis and insight into the personal finance industry on onlinecreditusa.com