Personal loans Connecticut are very popular among citizens. The total debt of Americans on personal loans is trillions of dollars. The average loan amount is several thousand dollars. Consumer loans are issued to pay for rental housing, car repairs, furniture purchases and other purposes.
The interest rate depends on the credit rating assigned to the potential borrower. The minimum annual overpayment on a credit line or card is about 12%. The maximum rate can reach up to 30% per annum. The following banks are actively engaged in consumer lending to US citizens: JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Capital One Financial Corporation, etc.
In addition to consumer loans, Americans can apply for a small loan (payday loan). The maximum amount of a “payday loan” is $100-$1,000. The money is lended for up to 1 month. The interest rate on the loan is 1-2% per day. The activities of microfinance institutions are regulated by the state authorities. To apply for a loan, you will need an ID, a credit card/bank account, US citizenship.
For what purposes and in what amount can I take out a personal loan today? What are the repayment terms? Why are credit institutions expanding the provision of such services?
Personal loan is usually used to purchase durable goods, such as cars, furniture, carpets, TV sets, as well as to pay for medical services, recreation, etc. Banks also issue personal loans that are not of a targeted nature, and it is not necessary for the client to indicate the goods he is going to purchase. This form is called a “revolving loan”.
Both consumers and lenders consider it a more convenient form of the loan repayment in parts, and the vast majority of loans (about 90%) are taken out with installments, and payments are made, as a rule, monthly. Personal loans Connecticut without installments can be repaid at a time, or a payment account is opened for the client. Loans without installment repayment are provided for the same purposes as with installments, but usually their amount is less, and the repayment period is up to 12 months. Such loans are more often used to pay for services, such as medical bills.
Types of personal loans Connecticut
There are so many banking programs that choosing the optimal one is a non–trivial task for the borrower.
The fact is that each credit institution in the line of financial products has loans with different terms and requirements. The diversity is explained simply: the bank wants to attract as many borrowers as possible.
To make a decision, an approximate idea of the main types of consumer lending will be useful. There are the following types of personal loans:
Targeted and non-targeted
Targeted loans are issued only for certain needs of the borrower. In this case, the client will not receive money in his hands: the bank transfers the amount directly to the supplier of goods or services. Usually this type of loan is offered in shops, travel agencies or private clinics.
A non-targeted loan implies the issuance of cash for any needs. The borrower decides for himself what to spend the money on. This is probably the most popular type of consumer lending.
Short-term and long-term personal lending options
Short-term loans are considered to be issued for a period of no more than 12 months. If the loan term is more than a year, then this banking product can be attributed to long-term.
With or without collateral
Such loans assume or, accordingly, do not assume collateral for receiving money. Both the loan amount and the repayment terms depend on the availability of collateral.
Pros and cons of personal loans
Why can it be profitable to apply for a personal loan Connecticut? This form of loan has the following advantages:
a large selection of offers from different financial institutions;
relatively loyal requirements of banks to borrowers, which can be easily fulfilled;
often, you can get a loan for a small amount with a minimum set of documents (passport + income statement in the form of a bank or even just a passport);
the possibility of early repayment without penalties.
Features to consider:
the bank is not always ready to approve the amount of money that you need;
the interest rate on the loan is determined individually for each client and may be higher than you would like;
as a rule, the loan term is up to 7 years.
It doesn’t take too much effort to get a consumer loan, because it can be a good operational solution when money is needed immediately.
How to pay a personal loan back?
The rules for the return of money are negotiated at the stage of signing the contract. The amounts returned consist of the debt itself and the interest accrued on the loan body. The repayment system depends on the composition of the debt:
- annuity – every month the borrower pays the same amount, and the bank directs these funds first to repay interest, and only then – to the amount of debt. This type of payment has a higher overpayment than others, but is convenient for users with a fixed amount of payments.
- differentiated – the payment amount varies from month to month, starting from the maximum. The main part of this payment is the creditor’s debt to the bank, which is returned in equal parts. Overpayment with this type of payments is less.
By signing the agreement, the client agrees to transfer payments according to a certain schedule. The contract specifies the number of payments, their composition, and the date by which the debt must be repaid.
For the convenience of customers, most banks offer online calculators on their websites. By entering the main parameters of the loan, you can roughly calculate the amount of payments.