Banks regularly thrive on the loans and services they furnish to businesses. For example, contribution funds for new businesses or expansion of some existing business, managing inter-city or international transactions provocative large sums, or contribution financial advice, etc. However, no bank can thoroughly ignore the personel consumers, as they constitute a large part of the store and are considered an foremost source of funds for the banks.
With the duct of time, more and more individuals have shown interests in lending from banks, they'll seek loan for a small home-based business, go for a loan for house construction, or even knock at the door of bank when they need a brand new car. Consumer loans differ in sizes and characteristics, fluctuating from long term huge mortgage loans to small loans taken out for shopping through reputation cards.
Consumer
Consumer loan is different from company loan in many ways. Even though the company loans are borrowed by individuals as well, but population tend to think differently when borrowing for the company as compared to the borrowing for personal use. Consumer loans are notion to be the more risky ones than company loans because individuals defaults (fails to payback) more often than the businesses, that's why consumer loans regularly have higher interest rates than the company loan. Also, consumer loan mostly has fixed interest rate.
Different types of loans:
Consumer loans can be divided into different categories. Some generally known types are ...
Credit Cards:
One of the most widely used forms of consumer loan; reputation cards have got such a huge user base because of the convenience factor. population use it for shopping at large sell stores, dining out in restaurants or at petrol pumps. Best thing about these loans is that consumers can avoid the interest altogether by paying back shortly after the transaction, otherwise a small division is added into the basic whole on monthly basis as interest.
House Finance or Auto Loans:
Another very foremost type of loan, house finance or mortgage has helped many to be in ownership of their own house. Auto finance is a loan that succeeds in the time of economic growth. However, both of these loans are field to manipulation by dishonest parties.
Installment vs. Non Installment Loans:
Installment loans are relatively smaller loans which the borrower is required to return in monthly installments, whereas non installment loans are needed to be paid off in a lump sum after a fixed duration of time. Most of the time consumer loans fall in "installment based loans" category.
Types and Characteristics of consumer Loans Consumer
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