Types of Consumer Loans
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. The consumer loan is usually taken so that one can 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. Some of the consumer loans include purchases made using the credit cards, credit lines as well as some loans such as dept consolidation loans, business loans as well as car loans. There are two types of consumer loan includes installment credit as well as revolving credit. Consumer loans enhance economic growth the more people borrow and repay the loan on time. A person can purchase the items they need when they do not have the cash by taking the consumer loans.
Dept consolidation loan is where a person pays off several smaller loans using a larger loan. The interest loan charged on the single debt consolidation loan is usually lower than for the many small loans. 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. 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. Unsecured loan consolidation is taken at a lower interest rate that one can use to pay off a credit card. 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.
When taking a consumer loan, it is important to find out whether one is qualifying to get the loan such as they are of age, are getting a regular income. One should also reveal the purpose of taking the loan to the lender to determine. One should ask the rates of the interest for the given loan to see whether it is worth taking the loan. There are terms that are key when taking a consumer loan and assess whether they are able to meet them.