ACCC shares the important facts consumers must know about their loan options
Boston, MA – July 31, 2018
Loans can be a crucial tool to help consumers achieve their financial goals and move forward with major purchases and life milestones. It’s important that consumers understand the different types of loans and their differences so they can make informed decisions that best meet their desired financial goals. To help consumers, national nonprofit American Consumer Credit Counseling explains the different types of loans available to consumers.
“Whether you’re paying for college or purchasing a home, you are most likely going to need to take out a loan,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “By understanding different loan options and how they’re used, consumers can make an educated decision to help them meet their financial goals.”
According to a study by Finder.com, 34 percent of Americans have taken out personal loans in the past year. The most common reason consumers have taken out a loan is for a vehicle related expense (31 percent) followed by bills (26 percent), emergencies (21 percent), tuition fees (19 percent), and consolidating debt (15 percent). With loans varying from $50 to $200,000, the study found that the average loan was $7,576.
American Consumer Credit Counseling describes the different types of loans.
To get a secured loan, consumers must leverage personal property. If the consumer defaults, the lender can take that property to cover the cost of the loan.
With an unsecured loan, consumers don’t have to leverage personal property. These loans are often harder to get, come with higher interest rates, and are based off the consumer’s income and credit history. If the consumer defaults, then the lender may seek debt collectors.
Conventional loans are not insured by a government agency and can be conforming or non-conforming, meaning they either follow the Fannie Mae and Freddie Mac guidelines or they don’t.
Open-ended loans have a fixed limit and can be borrowed over and over again once they are repaid. An example of an open-ended loan is a credit card.
A close-ended loan cannot be borrowed again after repayment. These types of loans include mortgages, student loans, and car loans. Consumers must re-apply for these each time.
ACCC is a 501(c)3 organization that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling and student loan counseling, call 800-769-3571
- For bankruptcy counseling, call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at https://www.consumercredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt counseling, bankruptcy counseling, housing counseling, student loan counseling and financial education. Each month, ACCC invites consumers to participate in a poll focused on personal finance issues. The results are conveyed in the form of infographics that act as tools to educate the community on everyday consumer debt issues and problems. By learning more about financial management topics such as credit and debt management, consumers are empowered to make the best possible financial decisions to reach debt relief. As one of the nation’s leading providers of personal finance education and credit counseling services, ACCC’s certified credit advisors work with consumers to help determine the best possible debt solutions for them. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). To participate in this month’s poll, visit ConsumerCredit.com and for more financial management resources visit https://www.consumercredit.com/debt-help/.