It is clear that credit has helped increase Americans’ purchasing power. Many people wouldn’t be in a position to purchase homes, cars, or any other basic goods without credit. However, this dependence on credit has normalized the use of debt in the US.
With consumer debt currently standing at $14.96 TILLION and the average consumer having $92,727, it is important to learn how different debt types may affect your future and your consolidation now official finances.
Do you want to learn more? Let’s take another look!
1. Credit card debt
Credit card debt, which is one of most common forms of debt, is one of the most prominent. Consumers who value their ability to access goods and services quickly will love credit cards. Credit cards allow you to improve your credit score, and also give you rewards. All that comes at an expensive price.
Ninety per cent of US adults have at minimum one credit card in their records. Many Americans don’t pay full monthly, but as many 75 percent of those with credit cards have an overdraft. This means that they can carry the balance for the rest of the year. The average balance at $5,315. This type revolving, non-secured debt can cause serious interest. Late fees may apply to missed payments.
Clearing credit card debt is a good idea. A debt consolidation loan could help. The Plenti credit consolidation loan provides you with the best and fastest way of consolidating your debt.
2. Auto loan debt
Most consumers don’t have sufficient funds to purchase a vehicle immediately so they obtain a secured car loan. The collateral is the car. The average American adult has at least one car loan. This amounts to $23,703.
If you finance a vehicle in this manner, the person lending the money can claim ownership. In this way, if your payments stop for any reason, the lender may take possession of your brand-new car. The downside to auto loan debt is the fact that your car may never be worth the price you paid. Therefore, you could find yourself in a worse financial position if your payments are not made on time.
3. Mortgage Debt
Mortgage debt is a great example of “good”, as your home serves as collateral and you pay monthly installments. The big advantage of buying a high quality asset is that it will likely be worth more than you paid for, unlike auto loans debt.
This type of debt affects 44% of Americans, and the average mortgage amount is a staggering $208,185. No surprise then that the US has the highest outstanding mortgage debt.
Mortgage loans are like all debts. You’ll need to pay interest. When you consider large amounts and payment plans over several decades, interest can add up to serious cash. A 30-year mortgage, at a rate of 3.89%, for $250,000, will cost you close to $420,000.
4. HELOC debt
Home equity line of credit (HELOCs), are loans that allow homeowners the use of their property as collateral. You can use your home equity to pay off existing debts, finance a purchase or fund a home renovation project. HELOC accounts are owned by approximately 12 percent of Americans. Their average debt stands at $41,954.
5. Personal Loan Debt
Personal loans allow you borrowing a specific amount of money to pay it back over time. Most personal loans are available for up to ten-year terms. These funds can cover all expenses, including debt consolidation and emergency expenses. With an average personal loan debt of $16,458, nearly 25% Americans have this type credit.
Personal loans may be secured, or unsecured. Secured personal mortgages require that you use your home, vehicle, or other collateral to obtain money. Unsecured personal personal loans do not have a lien on any personal property. Unsecured loans can be more risky than secured loans, and have lower maximum loan amounts as well as higher interest rates.
6. Student Loan Debt
Millions of Americans could not afford higher education if they didn’t have access to student loans. Because you are using the money borrowed to improve an asset, student debt is often considered “good” debt. ,, is the asset.
There are still ways to cut down on the cost of further education, and lower your chances of taking on student debt. These include applying to grants and scholarships, choosing a specific school, and working alongside students.
7. Medical bill debt
Americans are often faced with high-quality medical bills. While the best insurance policies can cover 100% of these costs, they also have coverage that covers only a fraction of the cost of healthcare. With 28 percent of Americans having more than $10,000 in outstanding medical debts, there are 137,000,000 Americans.
Like other types debts, medical bill debt is subject to negotiation. Talking with your hospital or healthcare provider about the problem can help you to assess your eligibility and negotiate a lower rate or a payment plan. For those with medical bills from multiple providers, it may be a better option to get a consolidation loan to reduce the number of creditors and monthly payments.
Understanding Different Debt Types
There are many types debt, but one thing unites them all: Paying back what you owe is the best method to get out.
A debt consolidation program is an effective tool to help manage your finances and develop a repayment plan that fits your needs and preferences.