Widespread use and popularity of consumer loans due to the simplicity of their receipt, which is usually associated with a small amount of the loan and its relatively short duration. That is why the number of visit such loans does not decrease even during the financial crisis, and many banks make retail consumer lending the main focus of their own work. However, not all borrowers take full advantage of consumer loans, so it is logical to consider the issue in more detail. Consumer loan is usually understood as a loan that is issued mainly to individuals for the purchase of any consumer goods or services. By and large, a kind of such loans are even mortgage or car loans, however, it is considered to be their separate types of lending. The main features of consumer loans are their short duration, which rarely exceeds 1.5-2 years, as well as an insignificant amount compared to the already mentioned mortgages and car loans.
Quite often, consumer credit is issued in the form of installment payments, when interest on the loan is not actually allocated, being included in the price of the goods. In this case, the loan, in fact, is issued directly by the outlet, and not by the bank, not being a full-fledged loan, since there are no formal signs of it in the form of interest for using borrowed funds and concluding a loan agreement.
Types of loans
Currently, there are several types of consumer loans that can be classified according to their various parameters:
Non-target Such loans are issued in cash or by credit card. Important features of such loans are a higher interest rate compared to the target, as well as a smaller loan size. Despite this, according to many financial analysts and specialists in the banking services market, this particular type of consumer loans is the most common;
Trust. Issued by the bank to purchase a particular product or service. Often, the design takes place directly in the store, where the borrower has already picked up the purchase he needs. Often, this type of loan is used to pay for various services, such as medical treatment or a tourist trip;
Express loan. A relatively new type of lending, which is provided in most cases online, being essentially an improved and more profitable version of microloans for the client. The main features of such loans are the high interest rate and small loan size;
Credit Bank Card. This variant of loan processing, when borrowed funds are received on the plastic of the client, is rapidly gaining popularity. The reasons for this are the simplicity, security and convenience of the procedure for depositing funds in conjunction with the ever-increasing number of cards held by individuals.
