First of all, many consumers are unaware that the term “credit” can apply to more than one form of credit. As a result of consumers being unaware of the different types of credit offered to them, they often agree to terms that are not fully understood. For this very reason, at Quick Consolidation Loans we want you to completely understand the different forms of credit, what is on offer to you, and how it works, allowing you to make an informed decision at the end of the day.
2 forms of credit
- Secured loans and credit uses the consumer’s assets as collateral. As a result, these assets can be repossessed if you default on payments. This will be used to cover the cost of your debt.
- Unsecured loans and credit on the other hand, doesn’t make use of your valuables. Furthermore, these rely solely on your word, which these credit providers accept in good faith.
|Secured Credit||Unsecured Credit|
|Car loan – the car becomes collateral||Signature loans – these may have higher interest rates. This is to cover for the fact that you are not using your assets as collateral|
|Home equity loan – real property value secures your loan||Mastercards, Visa cards – here you are required to pay a monthly minimum|
|Bond/Mortgage – your home secures the debt||Retail and petrol cards – monthly minimum payments are to be paid every month|
|Line of credit – your debt may be secured by your home, finances in your bank account, and/or other assets|
These are not the only types of credit available to consumers. In addition, other types of credit include:
- Open-ended credit – would usually consist of credit cards. Where an amount is allocated and consumers are free to use the credit however they wish.
- Closed-ended credit – is a fixed amount of credit, allocated for a specific purpose, such as a car or home loan.
- Non-instalment credit – comes with a high credit limit. When the credit is exhausted, the full amount needs to be settled in full.
In conclusion, if you are ready to enter to the credit market and are in need of a consolidation loan, contact us today!
We will be able to offer advice on the suitability of debt consolidation to your specific financial situation, as there are instances where it would prove unsuitable. Our consultants will be able to help you with regards to secured and unsecured debt consolidation, and advice as to which would be most favorable to your outstanding debts. Operating on a national basis, we can also provide you with debt counseling or a debt review in South Africa. As mentioned, debt consolidation could save you on monthly payments and interest rates, which has made it a viable option for many. To find out if debt consolidation in South Africa is an option for you, contact Quick Consolidation Loans today.