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. There are regulatory agencies in a given state to monitor compliance to the set regulations set for consumer loans and also ensure consumer protection. 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 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. 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. When paying for credit cards, one can take an unsecured loan consolidation at a lower interest rate. 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. Business loans which are a common type of unsecured customer loan may lead to a tricky situation when the person fails to repay or becomes bankrupt hence the lender needs to make sure the person meets certain criteria to be successful. When purchasing a car, one can also take a car loan to fianc? their purchase for 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. One should ask the rates of the interest for the given loan to see whether it is worth taking the loan. One should also know the terms of the loan that have been put in place and see if they can meet them.