Personal credit is nothing more than a certain amount of money granted by a banking or financial institution, whose most significant differential is the freedom to use it. This means that you don’t have to say how you will spend this money, as with financing.
The institution charges monthly interest in exchange for this service, which varies according to the negotiation signed in the contract and company policy. Other details can interfere with this amount, such as the customer’s credit analysis and borrowed amount. All of this can generate a rate readjustment as a way to avoid the probability of default.
What Are The Main Differences Between Loan Types?
Now that we know the main types of credit offered in the market find out below the main differences between each one.
Fees
The most significant differential of a loan is the interest rate, as it directly influences how much will be paid for that credit.
Payment Term
This information is also essential, as it is easy to organize to cover the installments without any hassles. See the approximate time comparison:
- Consigned loan: 10 years;
- Personal loan: 5 years;
- revolving credit card: 1 month;
- overdraft: 180 days;
- Loan with property guarantee: 15 years;
- Loan with vehicle warranty: 48 months;
- financing: 20 years.
Before closing the deal and signing the loan agreement, put everything at the tip of your pencil to ensure that the cost-benefit ratio (interest vs. payment term) is convenient for you. Try to balance these two factors, so you don’t get into trouble. Check loans in SF
The Maximum Amount That Can Be Borrowed
What is the ideal value for you? The maximum limit of a personal loan also counts when making your decision. This is because there is a possibility that the intended money is not available in one modality, making you opt for another. Check out:
- consigned loan: 35% installments of the INSS benefit;
- Personal loan: 20% of confirmed gross income;
- revolving credit card: 85% of your card bill;
- overdraft: negotiated between the customer and the bank;
- loan with property guarantee: up to 60% of the house’s value;
- Loan with vehicle guarantee: up to 80% of the car’s value.