There are different consumer Financing services to serve your needs.
Your financial situation is different from someone else. The consumer financing services that work for someone may not be the best choice for someone else. You should take the time to understand all the consumer financing services options available to you to find the best solution for your needs and goals.
Consumer Financing Services Solutions
Consumer Financing Services - Credit Card
Probably the most revolutionary consumer financing service has been the advent of the credit card. A credit card is a card that allows you to borrow money against a line of credit, known as the card’s credit limit. Credit cards offer convenience, consumer protections and a quick way to build your credit history. Depending upon how you use them will affect your credit and your ability to borrow money in the future.
Banks, credit unions, retailers, and credit card companies all issue credit cards. Visa and Mastercard are companies that help process payments, they do not issue credit cards.
There are several varieties of credit cards. General purpose cards can be used anywhere. Private label retail cards can typically only be used at the issuing store or service station.
Most general purpose cards are unsecured credit cards where the issuer extends a credit line line based mainly on your credit history.
Secured credit cards, conversely, are backed by funds you put in a deposit account that the card issuer can claim if you default. These are ideal for those just starting to establish credit or those with damaged credit.
Each time you charge, you borrow money from the card issuer. However, because credit cards offer a revolving balance option, you are not required to repay the entire loan. Instead, as long as you make at least the minimum requested payment, you can carry the remainder over to the next month. The credit card companies desire this, since Interest will be added to the balance. However there is no interest charged if you do not carry your balance over from month to month.
Credit cards have high interest rates and how you use them (account balance, payment history, etc.) will affect your credit history and score.
There is no secret to using credit cards wisely. If you get a low-fee account, always pay on time, and carry no balance from month to month, charging is free. Basically you have an interest free, revolving, unsecured personal loan.
Consumer Financing Services - Student Loan
A Student Loan, as the name implies, is money that you borrow to help pay for school with the expectation that you will pay that money back after graduating in the future. Student loans make it possible for many people to attend college and pursue their future career goals. However this comes at a stiff price.
According to the Federal Reserve, in 2018 69% of college students took out student loans. They graduated with an average debt of $29,800, including both private and federal debt. Of that, 14% of their parents took out an average of $35,600 in federal Parent PLUS loans.
For many, a student loan is the first loan they take out. One important part of any loan is the interest rate. This is essentially what the lender is charging you for the money when you to take out the loan. Student loans are no different, and the interest rate will vary depending on the type of student loan and the terms that you agree to.
There are two main types of student loans available: federal student loans and private student loans.
Federal student loans are guaranteed by the U.S. government with interest rates set once a year and are fixed for the life of the loan. That is, the interest rate on the loan will not change over time. Private student loan interest rates are typically higher than federal student loans, and will vary by the specific lender, and may include both fixed and variable rate options.
You goal should be to pay off your credit card bills in full at the end of each month and set aside money toward your emergency savings.
Consumer Financing Services - Consolidation Loan
A Consolidation Loan (often referred to as debt management) is a process of combining your unsecured loans into a single, larger loan (debt) with a more favorable interest rate, payment terms and lower monthly payment. Examples of unsecured debts that can be consolidated include credit cards, personal loans, medical bills and some types of student loans. The goal of using a consolidation loan is to improve your financial situation by lowering your TOTAL costs of financing your unsecured debts.
Consumer consolidation loans simplify loan repayment, offer a means of reducing your average interest on your unsecured debt, usually lowers your total debt costs and helps you get out of debt faster. There are many factors that come into play to get you the best possible average interest rate on your consolidation loan. These factors include the type of debt, your income, credit score, payment discipline, and other factors.
Consumer Financing Services - Personal Loan
Personal loans are general purpose loans. Personal loans are a great way to pay for unplanned expenses like car repairs, to consolidate high-interest credit card debt or just get cash at a low rate for any old reason. Unlike a car loan or a home mortgage, personal loans are not secured by collateral.
You can usually use the funds at your discretion, although some lenders will restrict what you do with the money. They are often more difficult to get compared to credit cards. They come with sometimes strict qualification requirements and their own unique rules.
Personal loans require you to make set payments on a regular schedule (usually monthly), over a specific period of time. This is different from revolving loans like credit cards, which only require you to make minimum payments and have open-ended terms.
Many consumers take out personal loans and use the proceeds to pay off their credit cards. This can offer a couple of benefits. First, you will have only one monthly payment, and you might find that your loan’s interest rate is lower than the average interest rate of all your cards.
Student loans also tend to come with high interest rates, so you might find that paying them off with a personal loan saves you some money. However, personal loans don’t come with the same tax advantages as federally recognized student loans. Check with a tax professional first.