Average interest rate on loans in the USA ranges from 3% to 5% per year. Very often this question is of interest to people who have moved to live in one of the American cities and need to quickly buy expensive things, furniture and equipment. The first thing is the low (by European standards) interest rate. Thus, the average rate does not exceed 3-5% per year. Americans distinguish several main types of lending:
- mortgage;
- auto loan;
- education;
- personal loan.
The researchers note that the last 25 years have been a time of record low rates for the United States. However, recently this indicator has started to slowly go up. However, when signing an agreement, keep in mind that interest is both constant (even when taking money for a period of several decades, the client can be sure that the rate will not change) and floating. The latter means that some agreements may contain a clause on a possible increase in the size of the ready-made, which will be paid by the borrower.
Is it easy to get a loan in the USA?
The requirements of banks to potential borrowers are also different. In the United States, the emphasis is stressed not on documents confirming the client’s financial solvency or the presence of some material wealth, but on some other important papers. The first important metric is called the Social Security Number. Every citizen of the United States has such a number. It is able to contain the key information about a person. According to it, computer systems can easily find the entire available database of documents about a person and view almost any data about a specific person. In this regard, for Americans there is an elementary rule of personal safety – not to tell anyone the insurance number.
The number can also tell everything about a citizen’s credit history. This is the second most important indicator that will directly affect the positive or negative decision of the bank to issue a loan. The process of checking the credit history is carried out in the simplest way. The client indicates his number, which is subsequently sent to one of the bank’s friendly organizations involved in verifying the data of borrowers. The organization quickly checks all information related to previous loans and provides it to the bank. Credit history is measured in numbers (from 300 to 850). At the same time, the approval of a loan application is most likely with an indicator of 650 on this scale. Therefore, it is most important for the borrower to maintain the rating of their history. This is influenced by the following factors:
- the amount of credit money that the client spends. The higher this indicator, the worse it is for the rating;
- timely payment of debts;
- no fines. These are conditional entries in the history of the client’s loan, which do not entail direct restrictions, but have a negative impact on the rating;
- the number and term of the agreement. The more transactions performed with the bank – the better. The longer the contract with the bank is, the more reliable the client is.
Mortgage loan in the USA
This type of lending is especially beneficial for both citizens of the country and for foreigners. There is an opinion that it will be much easier to get it in the USA (and pay off) than in any other country. There are several reasons for this:
- Loyalty. It is literally difficult to get a refusal to issue a mortgage in the USA. There are many government programs that support people willing to borrow money to build or buy new homes. Therefore, banks are ready to provide favorable termsto almost everyone who wishes;
- Floating rate. American banks lend money is explained partly due to the fact that they offer an interest rate that can change over the course of several years. Its changes depend on how conscientiously the client fulfills his obligations under the agreement, which in turn stimulates clients and allows banks to have additional income from unscrupulous payers;
- Additional income is recorded by the bank. A rare credit institution in Europe is ready to take into account the funds that a citizen receives from “unconfirmed” sources. In the USA, banks willingly take into account (of course, when providing documentary evidence) the profit that the borrower receives additionally.