What is a household debt?
Household debt is the total amount of money that adults owed to financial companies, including any mortgage. The debt will arise when the loan application is approved. The loan funds are provided immediately and a payment agreement is achieved. The debtor will pay a specific amount of money to the creditor or financial institution every month after the predefined period of time. Included in the amount to be paid to the creditor is interest or cost of lending money. All these items can be obtained from a wide range of sources, from a bank, a loan, credit card companies and short -term loans. The total amount of household debt is the total amount of all these sources. This item is usually a largest debt and has the longest period, between five and forty years. The mortgage is ensured by residence or property. If the debtor does not pay a mortgage monthly payment, the financial institution may exclude or take over the ownership of the house.
Revolving credit is any type of credit tool where the payment is used to increase the amount available. A credit card or credit line is a revolving credit. For example, a financial company will issue a credit card with a USD limit (USD) $ 200. The debtor charges $ 200 in transactions, but pays this amount in full. The creditor now has an available credit of $ 200.
The debtor does not have a predefined amount of payment, but the minimum payment required to cover the double amount of interest each month. This type of household debt represents the most common debt type. Most households have at least tinkles of loan revolving.
A fixed loan is a specific amount of money with the planned repayment period. The essential amount is not available because the loan is paid. Instead, the total debt is reduced by every payment. This type of loan usually has a lower interest rate than a swivel credit.
A secured loan includes any type of loan where the asset is used as zAid loan. Any type of vehicle, loan for motorcycles or boat is a loan supported by an asset. These types of loans provide a wider number of financial institutions, including some car manufacturers. If the debtor does not apply, the financial institution will re -take over this asset.