Credit of all kindshas never been more readily available to consumers. From owning a home to going to school, debt is part of many major life goals. When should you expect to be in debt? These are the biggest loans you are likely to take out in your lifetime.
The average mortgage is nearly $200,000, but that number can be even higher in hot real estate markets where the price of housing has pushed average housing prices past a million dollars and condos ever-higher as well. Although it is a major loan, a mortgage helps you build equity over the long term.
After a mortgage, student loans are often the biggest single type of loan you will ever take out. The average size of a student loan is now over $26,000, and it’s often the first time you will ever borrow money from a financial institution. Student loans can be difficult to pay back as you have to start making payments at the start of your career, when your earning potential is smallest.
Low interest rates and longer terms have financial regulators, and even some auto companies, worried about the size of car loans. Car loans that last six years or longer are becoming increasingly common, because consumers aren’t paying attention to the total size of the loan. They only look at how much they can afford each month. The longer a car loan’s terms, the more you pay in interest.
Personal Loans or Lines of Credit
Personal loans tend to be capped around $10,000 as they are riskier loans for banks to make without collateral. If you don’t have a great credit score, you may struggle to find a fair interest rate. The personal loan segment has a number of lenders who charge exorbitant rates, including payday loans. They can often be the cause of insolvency.
Lines of credit are extended by banks and Canadians often use them for emergencies or unexpected expenses, such as home or car repairs.
Credit Card Debt
The average credit card debt is over $2,600, making credit cards one of the largest loans you may take out. The difference with credit card debt is that you take it out piecemeal, every time you use your card to pay for a restaurant bill, clothes, electronics, or a plane ticket.
When it comes to the latter two types of loans, you may want to explore consumer proposals in Ontario or bankruptcy if you’re looking for debt relief. If personal loans, payday loans, lines of credit, and credit card debt have become burdensome, you may need breathing room in order to keep up with your mortgage, student loans, or car loan payments. Talk to a bankruptcy trustee, now known as a Licensed Insolvency Trustee, about your options for debt relief. Ontario-based bankruptcy trustees David Sklar & Associate offer a free, first-time consultation where they review your financial situation and provide you with advice.
Debt is a regular part of life and often an important way to take the next big step. But it doesn’t have to control you. Solve your debt problem and get back to living.