Loans in the United States are characterized by low interest rates. The average indicator is in the range of 3-5% per annum. But such favorable offers are provided for American citizens.
It is more difficult for migrants to get a loan from an American bank
Not all bankers are ready to issue loans to foreign citizens. In any case, the American credit system has become an example for other countries. To understand all the nuances, you need to consider the issue from different sides.
General information about lending in the USA
Migrants often choose to move to America, hoping to get a loan and a job. There are good examples when currently successful Americans started their business with loans. The rate from 3 to 5% per annum allows you to buy goods and gradually pay for them without spending all your savings at the same time.
What loans do exist in the USA now:
- buying a car;
- tuition fees at the university;
- mortgage loans;
- for business development;
- for consumer purposes.
The decision to issue a loan has been worked out to the second. First of all, the bank checks the borrower’s credit history. You can find out by her social security number.
What affects an American’s credit history:
- late payments;
- number of closed loans;
- number and term of existing loans;
- how many times the credit history was requested.
The generated rating is the number of points. A good rating starts at 650 points. The average values range from 300 to 850. Points are both accumulated and spent. The higher the rating, the more credit opportunities the bank provides.
So customers with a high rating can take out a mortgage or a large loan of several hundred thousand dollars
In case of non-payment in America, collectors do not come. There is no such practice here. The debtor has the right to arrest and detain. Therefore, Americans are very afraid of delaying loan repayments. They have large fines. As a result, debts are growing like a snowball.
Interest rate history by year
Fluctuations in the interest rate of the US loan in dynamics show the state of the economy in the country. After During the Second World War in the 50s, the figures fell to 05% per annum. The economy was booming. On average, the 1950s and 1960s are characterized by rates ranging from 0.5% to 9%.
The 1973 oil crisis led to an increase in inflation. Therefore, the rate rose sharply from 5 to 10.75%. After the stabilization of the situation, the year 1980 came. Economic turmoil has led to rates of up to 20%. Then the indicators stabilized. Consequently, by the 90s the percentage was only 5%.
The historical minimum, comparable to the values in the “fat” 50s, was reached in the period 2001-2003.
Then the interest rate was only 1%. By 2006, the real estate market had overheated. To counteract the growth of the “bubble”, the percentage was made 5.25. But with the onset of the global crisis in 2008, the rate was again reduced to almost zero. Now it is in the range of 3-5%.
Consumer lending in the USA
Interest rates on loans in the United States have made consumer loans (personal loan) very popular. They mean loans that are used for personal expenses. For example, an American can take money from the bank for treatment or purchase of equipment.
The final interest rate at which the loan will be approved depends on the amount, credit history, term and income of the borrower. The lower the bid, the lower the overpayment.
What is the interest rate on loans in US banks?
The offer depends on the bank. The bets are divided into fixed and floating. The first option is suitable for those who do not plan to resell or move. Then investors prefer to take, for example, a mortgage at a floating rate.It is beneficial to people who pay off debts to the bank within two or three years. Despite the increased percentage, due to the short term overpayment is minimal.
US banks issue loans strictly according to the rules. They work in a highly competitive environment. For this reason, customers always have a choice. You can apply to different banks and choose the optimal conditions. Some financial organizations are ready to work even with migrants.
Required documents for obtaining a loan in the USA
To get a loan from an American bank, you will need to prepare a package of documents. It includes:
- application from the borrower;
- credit history;
- certificate of bank account availability;
- social card number;
- passport and its copy;
- green card.
The attitude of financial organizations towards migrants is wary.
You need to confirm your financial viability. Therefore, experts advise you to stock up on letters of recommendation from banks with whom you have previously successfully cooperated. Americans have a credit history formed almost all their lives. It is much easier for them to get money in the bank.
American Education Loans
The average cost of studying at American universities is approximately $130,000. This is a serious amount for the average family. Banks willingly issue loans for applicants at 4-9% per annum. By the way, the chosen educational institution can become a guarantor in this situation.
The PLUS, Perkins and Stafford programs are popular among students
You can pay off loans after receiving a diploma and getting a job. The term can be chosen up to 30 years. But as a rule, such loans are repaid much earlier.
Mortgages in the states have long been a popular way to buy an apartment or a house. The average rate is 3-4% per annum. The overpayment depends on the period for which such a loan is issued. It is profitable to take a mortgage in a crisis. But not all Americans now have the opportunity to make a monthly payment due to the events of 2020.
The programs differ depending on the bank and the state where the purchase is planned. Against the background of recent events, banks offer favorable conditions to lure customers. For migrants, you can also choose an option. Only the rate will be about 6 to 8%.
Read also: What are the salaries in America?
Buying a car on credit
America is a country of cars and highways. Buying a new car is facilitated by a low interest rate. Many banks reduce it to 0.5%.
If you take such loans for a period of 5-7 years, then the overpayment is practically not noticeable
Of course, the final offer of the bank is strongly influenced by the credit history, the brand of the car, the degree of its novelty and belonging to an expensive or budget class. The average figures are in the range of 2 to 3%.
A loan in US dollars can be issued for the development of your own business. To do this, you need to think through a business plan. It states:
- The direction of activity.
- Report on the current financial condition.
- Sources of income.
- Information about the guarantors.
- Management structure.
Description of expenses, that is, what exactly the borrower plans to spend the borrowed money on.
Banks don’t like to risk their money. It is necessary to clearly argue the security of the transaction, turn to the table of contents
Comparison with loans in Russia
America is considered an economically successful country. But the US government loan is larger than Russia’s. At the same time, the Russian banking structure operates on similar principles. At the moment, the average interest rates are almost equal.
There are no such programs for Russian students, so in America. Most often, parents take out a consumer loan and pay for university education in this way.
What is the interest rate on deposits in the USA?
The United States has given a lot of loans and paid huge amounts of benefits. But banks do not seek to attract new depositors. For deposits, you can get minimal payments that do not cover the cost of maintaining the account and inflation.In Russian banks, it is not practiced to take payment for opening and servicing an account. Whereas American financial organizations calmly issue additional accounts to their depositors. Thus, even the minimum income that has accumulated from interest is leveled.
For clarity, consider an example of a standard savings account in an American bank. His rate is 0.01%, and the monthly service fee is $ 5. If more than $ 300 is stored in the account, no fee is charged.
In general, the trend for deposits is as follows: the more money is stored, the higher the percentage. But it rarely exceeds 0.8%Return to the table of contents
Why is it necessary to have a credit card in the USA?
Credit history in America plays a crucial role. It is taken into account even when hiring. Credit cards also help to start it and prove the borrower from the best side.
Obtaining loans from US banks is directly related to the borrower’s financial reputation. In addition to forming a positive image of a reliable person, a credit card gives other advantages:
- A grace period when the debt can be repaid without overpayment.
- Profitable cashback for purchases.
- Special offers and discounts for users.
For example, the user will pay 100% of the product price for cash. Whereas with a credit card, the buyer receives a discount and cashback. As a result, he will save more.
This practice is increasingly being implemented by Russian banks. The main thing is to choose the right conditions and pay on time.