Consumer loan also known as consumer lending or consumer credit is the amount of money an individual is lent for family, household, and personal purposes and it is usually non-secured. The major work of consumer loan is to purchase products and 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. Consumer loans are in two types including includes installment credit and revolving credit. With frequent borrowing and repayment of consumer loans, economic growth in a region is greatly achieved. A person can purchase the items they need when they do not have the cash by taking the consumer loans.
One can repay smaller loans they have accrued by taking a debt consolidation loan. Having the larger loan is usually better than the smaller loans since it has a lower interest rate. Student loan consolidation, unsecured consolidation loan and home equity loan or getting a mortgage for a second time are the common types of consolidation loans. Student loan consolidation is where a person who has graduated from college is allowed gather all loans from all years in college in a single loan. An unsecured consolidation loan is usually taken to take care of credits cards at lower interest rates. Paying off credit cards or accumulated loans can be done through the use of a Home equity loan or getting a mortgage for a second time which is taken against one’s home.
Business loans are those taken for purposes that pertain to business. There are various types of business loans such as bank loans, small business administration loans, mezzanine loans, and asset-based financing. The business loans under customer loans are usually unsecured loans in case a person fails to repay the loan or becomes bankrupt hence one need to meet certain criteria to be eligible for the loan. One can also take a car loan as a consumer loan to purchase a car.
One should access themselves when taking a consumer loan to check if they qualify to get the loan from the lending institution. One should have a clear purpose of how they are to use the consumer loan before borrowing to ensure money is well spent. One should ask the rates of the interest for the given loan to see whether it is worth taking the loan. Each loan also has conditions that have been set and see whether one is likely to meet them.