What Is a Personal Installment Loan?

Personal consumption loans refer to RMB loan business issued by banks to individual customers for specified consumption purposes. The main uses are consumer personal loans such as personal housing, automobiles, and general student loans.

Personal consumption loan

Personal consumption loans are loans made by banks to borrowers who apply for "reasonable consumer goods or services"

Loan amount

Up to 500,000, subject to the price of the purchased consumer goods or services, and providing corresponding loan guarantees.

1. The borrower shall fill in the application form at the loan office with valid identification documents, pledges, mortgages, and guarantor guarantee documents. After investigating the borrower's guarantee and credit, the bank will respond to the borrower within 15 days.

2. After the borrower's application is approved, a loan contract and a corresponding guarantee contract are signed with the bank.

3. The borrower will

   At present, personal consumption loans of commercial banks in China are in their infancy, and there are not many types of loans, mainly including:

   1. Personal short-term credit loans. It is issued by the lender to meet the temporary needs of the borrower who handles the payroll business of the Bank. The term is within one year, the amount is between 2,000 yuan and 20,000 yuan, and it does not exceed 6 times the average monthly salary income of the borrower. Provide secured RMB credit loans. The loan is generally not rollable.

   2. Personal comprehensive consumer loan. It is a loan issued by the lender to the borrower without restricting specific consumption purposes, pledged with effective rights recognized by the lender, or can be secured by legal and effective real estate. The loan amount is from 2,000 to 500,000 yuan, and the term is from six months to three. RMB loans of the year.

   3. Personal travel loans. The loan is provided by the lender to the borrower for the purpose of paying travel expenses, pledge guarantees with effective rights recognized by the lender, or a unit or individual with the ability to make reimbursement as the guarantor for repaying the principal and interest of the loan and co-existing joint and several liabilities. RMB loan of 2,000 to 50,000 yuan, with a term of six months to two years, and providing not less than 30% of the actual price of the tourism project's original loan.

   4. National student loans. It is also divided into general student loans and special hardship loans, which are issued by the lender to the financially difficult undergraduates and college students in full-time colleges and universities to pay tuition and living expenses, and the education department sets up a special fund for student loans. Special interest-denominated RMB loans.

   5. Personal car loan. The lender provides a guarantee to a borrower who purchases a car from a special dealer to purchase a car, pledge a unit or individual with the rights recognized by the lender, or have the ability to make reimbursement as a guarantor who repays the principal and interest of the loan and bears joint and several liabilities. Special RMB loans for depositing the first installment of a car with a loan amount of up to 70% of the car loan and a term of up to 5 years.

   6. Personal housing loans. It is a loan issued by the lender to the borrower for the purchase of ordinary housing for self-use or urban dwellings for repair or self-built housing, with the mortgage, pledge or guarantee approved by the lender to deposit the first installment in the bank. The maximum loan amount is the housing payment. 70% of RMB special loans with a term of up to 30 years. Personal housing loans are divided into three types: self-employed personal housing loans, entrusted personal housing loans and personal housing portfolio loans.

   In addition, there are personal small loans, personal durable consumer goods loans, personal housing renovation loans, wedding loans, labor service loans, and various special loans derived from the above loans.

   1. Imperfect personal credit reporting system The personal consumer credit risk mainly comes from the borrower's ability to repay and personal credit risk, that is, the fluctuation range of personal income and the level of moral quality cultivation. The personal credit status is also close to the credit environment of the entire society. Related. Under the premise of relatively stable income levels, the grasp of consumer credit by commercial banks determines the degree of consumer credit development.

   2. Defects in the management of commercial banks, resulting in increased potential risks. At present, although domestic commercial banks continue to strengthen system construction, their overall management level is still not high, and it is difficult to get out of the weird circle of "chaos after one release, and death when caught." Since personal consumer credit business has not been established in China for a long time, it lacks advanced management experience in this area. Generally, credit officers of commercial banks rely only on more primitive inquiry materials such as the identity of the payee and personal income certification to make judgments and decisions. The credit investigation of an individual basically relies on the self-reported by the borrower and the description of the employer. The lack of normal procedures and channels for people's assets and liabilities, social activities, and most importantly, whether there are illegal records and dishonesty, for information and consultation, resulting in information asymmetry between banks and customers.

   3. The related laws and regulations are not complete. At present, China does not have a national law that uniformly regulates consumer credit activities and adjusts the relationship between consumer credit. The current legal provisions are basically formulated for legal persons, there are few provisions for consumer personal loans, and the punishment for breach of trust and breach of contract is not specific. Even if it does, there seems to be a tendency to protect the rights of the debtor. The implementation of many new laws and regulations has directly caused legal defects and problems in loan contracts and related contracts. This makes the bank lack of legal guarantees to start consumer credit business, and often has no way to deal with emerging problems. Because the consumer credit business is relatively fragmented, all of them are individual consumers, and the amount of loans is small and the number of loans is large, and the laws and regulations to protect bank claims are not perfect, especially the lack of legal regulations on personal loan guarantees. It is difficult to implement risk control due to high investment in manpower and material resources. The current rapid development of urban and rural consumer credit business calls for the introduction of China's consumer credit law as soon as possible.

   4. Blind marketing and unscheduled distribution of consumer credit pose huge risks. In recent years, in order to expand profitability and seize market share, various commercial banks have encouraged branches to vigorously develop personal consumer credit business. In the course of specific implementation, many illegal operations have occurred. In order to expand the scale of consumer credit, some commercial banks have issued rigid lending targets to grassroots banks. Many banks arbitrarily lower the loan standards and guarantee conditions, and provide consumer loans to high-risk, low-credit customers. In some regions, grassroots banks have even assigned a certain amount of consumer credit tasks to each employee in order to complete the loan task. Many employees blindly lend in order to complete tasks, and even use loans to make high-risk investments or stocks. The spread of this phenomenon will cause a new round of risk accumulation, which is not conducive to the healthy development of consumer credit business.

   1. Loans with multiple price ratios Consumers of quasi-loan loans, many people follow the recommendation of intermediaries to choose a bank. In fact, there may be many banks to choose from, with lower interest rates and faster approval.

   2. Pay attention to the hidden charges credit card is very convenient, installment payment is to let many people realize their consumption dreams in advance. Many credit card holders often receive calls from bank customer service asking if a large purchase requires installment payments, and give the "zero interest" advantage. However, zero interest does not mean zero cost. There is no free lunch in the world.

   3. Beware of overlord clauses. Car purchase loans are very common, and dealers charge car loan handling fees more commonly. Bundle sale of insurance has become the industry rule.