Don’t we all need some extra funds to meet our varying needs? I understand it would be easy to say savings will sort you out. But don’t be quick to forget that there are unforeseen expenses that come up and could throw you out of a calculated plan... the tough part is: that’s on a rainy day.
Consumer loans are carefully thought-out facilities to curb domestic needs that you could think of. I'm talking about growing small businesses taking loans to fund working capital requirements, equipment purchases, and the likes, or loans for property purchases, debt consolidation, education, and regular living expenditures are available to consumers at a go.
Well, in today’s read, I will be sharing with you the types of consumer loans that spread across our varying sectors. I bet you will learn something new from this read, so don’t get too casual with the letterings.
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What are consumer loans?
Simply put, consumer loans are a type of loan extended to consumers to fund specific items or purposes.
What are the types of consumer loans?
Just like our needs and wants vary, likewise our choice of priority at certain times, there is a variant of consumer loans out there for individuals to harness. Some of them are seen below.
1. Auto loan
Do you seek that car to make transporting easier, or do you have a plan to change your current vehicle but you don’t have enough means? One consumable loan that can make easy this feat is the Auto loan.
To finance the purchase of a vehicle, a bank or a car dealer can provide an auto loan. A normal vehicle loan would last between two and seven years. Because of the quick depreciation of automotive values, an auto loan has a shorter term and higher down payment.
2. Credit card loan
Among the numerous sorts of consumer loans, the credit card loan is considered the most widely utilized, hence what makes it popular. It is typically used by borrowers to purchase everyday necessities such as groceries, clothing, and other products on credit. Because the interest rate on this form of loan is a little higher, failing to pay on time might result in a significant penalty.
3. Personal loan
A personal loan is designed to meet the borrower's numerous day-to-day demands. Due to its wide range of end-use reasons, such as debt reduction and holidays, it is the most adaptable sort of loan in the consumer lending industry. This form of loan generally has a long repayment period and can be secured or unsecured.
4. Mortgage loan
One of the consumer loans that have an overly extended tenure would be the Mortgage loan. A mortgage is a sort of secured loan granted by a bank to a client to purchase a home, which is often significantly more expensive than the average person's annual income. The most popular mortgage is a 30-year fixed-rate loan, which is spread out over a time to spread out monthly instalments.
5. Education loan
The objective of an education loan is to fulfil the education needs by paying the college/tuition fees. In this way, students can pursue their life goals through proper education. An education loan is an unsecured type of loan, and the repayment only starts a few months after the student’s graduation from college.
6. Refinance loan
This form of loan is used to refinance existing debt, as the name implies. Any of the above-mentioned loans can be refinanced using a refinance loan. It usually offers a set payment and a cheaper interest rate, which is what draws customers in.
To summarise, consumer loans are personal loans that are focused on our everyday life. They are structures that are intended to serve a practical function in our well-being. The many sorts of consumer loans described below show what can be of great assistance to you, regardless of your area of interest.