Consumer credit: how much and for what duration for the best rate in 2018?
The rate of consumer credit is a question of amount and duration. To benefit from the best financing conditions, it is therefore necessary to adjust these two parameters in order to access the best rate of consumer credit ! But how to do it? What is the logic behind the setting of consumer credit rates? We tell you everything.
The longer it is… the more expensive
Basically, it is quite simple to summarize: the rate of a consumer loan increases over time. A short-term loan (1 year) is accessible under the psychological bar of 1% (0.75% in July according to the figures from Lite Lender), whereas it will generally be between 4 and 6% on 72 months. The progression is constant: the rate of a personal loan of 7,500 $ for example will be 1.02% on average over 12 months, 2.87%, 3.54% over 36 months, 3.75% over 48 months and 4.25% over 60 months and 5.13% over 72 months, an average increase of 0.82% for each additional year. However, this is not an absolute reality, because small sums (less than $ 5,000) are often penalized in terms of rates over short periods.
The scale depending on the amount
One might think that in the same way, the rate of a consumer loan decreases when the amount borrowed increases. If this is very often verified, it should still be noted that the rates are more of a rocking movement: they go up on the high amounts. On a 36-month works loan, for example in July, the rate initially decreases (6.43% under $ 5,000, 3.12% under $ 10,000, 2.94% under $ 15,000) then started to rise again (3.02% below $ 30,000, 3.14% beyond). This phenomenon however dissipates from 48 to 60 months of repayment period.
Small sums penalized
Borrowing a small sum, namely an amount less than $ 5,000, does not allow you to access the most attractive consumer credit rates promised by lending institutions. For a car loan taken out in July for example, the rate over 24 months is 4.36% below $ 5,000, and drops to 2.90% up to $ 10,000. The rate of a small work loan over 12 months even appears on average up to 9.40%, while it drops to 1.08% beyond $ 5,000.