Installment loans explained
The United States is a country with benevolent installment loans, both for Americans themselves and for foreign citizens. Low interest rates, loyalty to potential customers and the growth of the country’s economy are factors that determine the high demand for loans. Let’s take a closer look at the characteristics of an installment loan in the United States.
In America, there is a program to stimulate the construction of residential real estate and increase mortgage lending. Thus, credit institutions often meet with customers when considering applications and grant loans both for the acquisition of finished housing and for housing under construction.
The definition of an installment loan is given by the programs offered by American banks or by https://cashspotusa.com/installment-loans/ since most of it is issued at floating interest rates. Its amount varies according to the quality of the execution by the borrowers of their obligations. This allows banks to increase their income. And for customers, this has some disadvantages, among which there is an ever-changing monthly payment amount.
When considering a loan application, all banks in the United States take into account not only his official salary but also additional income, as well as retirement and bank savings, investments in securities, etc. .
The US banking industry is highly competitive, which helps provide customers with minimal interest rates and the widespread prevalence of mortgages.
US interest rate
Credit institutions offer mortgage loans to the local population at 3.5-7% per annum. For foreigners, the rates will be higher in order to minimize the possible risks of default and the return of the borrower to his country of origin. The final interest rate will be announced to a specific client after studying the documents submitted and his creditworthiness.
The nation’s largest bank, Bank of America, lends to US citizens between 3.75 and 4.4 percent annually. The rate will depend on the type of interest and the term of the loan. For foreigners, this range will increase by about two percentage points and will amount to about 5.75 to 6.4 percent.
Be sure to pay the first installment, the average size of which is 40% of the cost of housing. Some banks ask for 30%, others at least 50%. It all depends on the borrower, his creditworthiness and his financial reputation.
As for the duration of the loan, the customer can choose the duration of repayment of the debt that suits him. It varies from 15 to 30 years. Most borrowers try to get a loan on the maximum term in order to reduce the amount of the monthly payment. Short maturities are practically uncommon, as they reduce bank income.
It is important to mention the need to pay a commission to the bank in the amount of 3% of the loan amount for the provision of services. The specific amount, together with a monthly payment in 12 installments and a down payment, must be transferred to your bank account.