The amount of money an individual is lent for family, household, and personal uses and it is usually unsecured is known as consumer loan, consumer credit or consumer lending. It is usually incurred when one purchases products or even services. Monitoring for compliance is key for consumer loans to ensure that consumers have been protected and there are regulatory agencies that carry out the role. There are various consumer loans that one can take such as purchases made using the credit cards, credit lines as well as some loans such as debt consolidation loans, business loans as well as car loans. Installment credit and revolving credit are the two types of consumer loans. Consumer loans enhance economic growth the more people borrow and repay the loan on time. A person is able to purchase an item that they do not have even with limited funds when they take consumer loans.
One can take a debt consolidation loan which they use to repay the smaller loans that they have and remain with one larger one. Having the larger loan is usually better than the smaller loans since it has a lower interest rate. There are various types of debt consolidation loans such as student loan consolidation, unsecured consolidation loan and home equity loan or getting a mortgage for a second time. In order to gather all loans from all years in college in a single loan, a person who has completed college can take a student loan. When paying for credit cards, one can take an unsecured loan consolidation at a lower interest rate. Home equity loan or getting a mortgage for the second time is a type of a loan taken against their home to pay credit cards or accumulated debts.
Business loans are those taken for purposes that pertain to business. Bank loans, small business administration loans, mezzanine loans, and asset-based financing are some of the common types of business loans. One needs to meet or the eligibility criteria for an unsecured business loan to ensure that they do not fail to repay bit even if they become bankrupt. One can also take a car loan as a consumer loan to purchase a car.
Eligibility criteria for a consumer loan are quite a number hence one should ensure that they meet them all to get the loan. One should have a clear purpose of how they are to use the consumer loan before borrowing to ensure money is well spent. The interest rate being charged on the loan should be checked to see whether it is worth taking the consumer loan. Each loan also has conditions that have been set and see whether one is likely to meet them.