What is consumer loan?
A consumer loan is a wide term for any type of loan secured by an individual from a financial institution, such as a bank or some other company that specializes in loans. This differs from commercial loans, which is the practice of banks providing loans to businesses. There are many different types of loans in the area of consumer rental, including mortgages, car loans and credit cards. The basic conditions for such loans are that the consumer gets money for his needs in advance, because he knew he would have to pay the loan back together with interest, the creditors in the specified amount of time. Whether they need cash to make a deposit for the house or buy a car, or need to be kicked out of some personal financial holes, loans are often the only way to get the required cash. Around the practice has grown the entire sector of consumers, in which the bank or other justified creditor provides the consumer until the consumer cannot return it.
creditors achieve their profits from consumers lending in different ways. If the loan is secured, it means that the debtor offered some form of security. If the debtor fails to repay the loan, the creditor may request a collateral from the debtor as a form of repayment.
In addition, most consumer loans come with the interest attached. This is the amount added to repay the principal that the debtor must return to the creditor. Interest rates differ depending on the type of loan it is required, despite whether the loan is secured or unsecured, how long it will take to repay the loan and credit history of the debtor. Those consumers who have proven in the past that they have a good credit and can repay their loans will generally get better rates from creditors.
mortgages are a common example of consumer lending, as the debtor makes a deposit for the house and then pays the rest of the house together with interest in installments. Credit cardThey are also a form of consumer loan. Anyone who has a credit card basically receives a loan from a credit card company every time he uses the card. Banks or other creditors can also provide personal loans to their customers to use capital at their discretion.