Types of Consumer Loans

2008-12-08T11:45:00.000-08:00

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As we mentioned in previous articles everybody knows that banks are a major consumer lender, they represent over 70% of all consumer loans in the market. In fact, besides banks there are many other financial institutions that offer consumer loans in the market. Some of them offer cheaper interest rates to attract customers. It is your responsibility to find out, so you can pay very little interest and save some money. In this article, we will discuss types of consumer loans.

1. Personal line of credit
Banks, trust companies, and credit unions may offer their creditworthy customers a personal line of credit as a convenient substitute for personal loans, usually 10,000 to 15,000 dollars. Sometimes, they may also require some types of collateral for this type of credit such as the equity of your home if your want to have a larger personal line of credit.

2. Overdraft protection
Overdraft protection, available at banks, trust companies, and credit unions, allows deposit accounts to become overdrawn to a set limit, usually $1,000 to protect customers against sudden overdrawn from their account and NSF charge (over $35). This overdraft becomes a loan and is subject to interest rates as high as, or higher than those charged on credit card loans.

3. Credit card cash advances
Credit cards issued by any financial institution give card holders the option of obtaining a loan, called a cash advance without making a special application each time funds are needed. Interest here is calculated daily and begins at once at rates usually higher than a line of credit or a personal loan depending on the interest rate on the card holder agreement.

4. Demand loans
A customer of a financial institution with a good credit rating may arrange for a demand loan by signing an agreement to repay the loan in full at a certain date, with interest (usually .05% higher than prime rate) due monthly with the condition that the lender has the right to recall a demand loan at any time.

5. Installment loans
Installment loans offered by financial institutions to borrowers with certain conditions such as a set interest rate, a maturity date, a repayment schedule, and certain security requirements.

I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:

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Posted by Kyle J. Norton at 3:51 PM

Personal Finance and Money Management 22

Types of Consumer Loans