What is a Consumer Loan?

The word consumer must have been thrown around so often that you must have gotten used to the word. For me, this word acquaintance started in my primary school when being taught things like social studies and perhaps integrated science. What people have been fed with subconsciously would be that consumers are limited to edibles; things that we eat or drink that directly nourish our body. But is this all a consumer is identified with, edibles and belly for the food? 

In today’s read, I will be sharing with you who a consumer is in its entirety, likewise, will I beam my light on a consumer loan, an example of a consumer loan, how a consumer loan works, the comparison between a consumer loan and a business loan. 

Away from edibles alone, any individual who purchases products or services for personal use and not for manufacturing or resale is called a consumer. A consumer decides whether or not to buy an item at the store or someone influenced by advertisement and marketing. The consumer is a valuable player in the business, as business decisions are intended toward consumer needs and expectations. 

A consumer loan is a type of loan provided by a bank to clients for the purchase of domestic products like appliances, and personal electronics. It is a loan given to consumers to finance specific types of expenditures known to them. A consumer loan could also be a loan made to a consumer by a creditor. 

Consumer loans allow the borrowers to purchase things beyond their annual earnings. While there are different types of consumer loans mortgages, auto loans, education loans, personal loans, refinance loans, and credit cards. Consumer loans are given to consumers to finance specific types of expenditures. A consumer loan could also be a loan made to a consumer by a creditor, and some the examples are:  

1. Television sets. 

2. Refrigerators. 

3. Car. 

4. Mobile phones. 

5. Air-conditioners. 

6. Home theatre systems. 

7. Laptops.  

8. Cameras. 

Requesting a consumer loan shows a pressing need that needs a fill. Below is how consumer loan works. 

While requesting a consumer loan, please note that the lender will charge you fees for giving you the loan. On top of repaying the principal, you’ll also have to pay the lender interest. 

Kindly note that the interest you’ll pay for your loan depends on how much you’re borrowing, the interest rate applied by the loan provider, and the tenure of the loan payment, also called the term of the loan. 

Almost similar, a consumer loan is under a personal loan, hence can be easily identified as the same. Consumer loans are mostly available at a 0% interest rate or No Cost EMI [Equated Monthly Installment] within a range of a few days to 36 months. 

Easy to say, a consumer loan is a type of personal loan made for consumers to cater to specific needs. 

A business loan is a different type of loan compared to a consumer loan. Its sole aim of loan request is for a business, compared to the consumer which ends with the individual. 

A credit report, pay stubs, or tax returns are frequently required within six months after applying for a consumer loan. With a business loan, the credit reports for the company will be examined, as well as the financial accounts for the previous three years. 

A car loan, also known as an Auto loan is a good example of a consumer loan since it is beneficial to the consumer directly, and not to a third party like a business loan. 

In conclusion, a consumer loan is a type of facility provided by a lender to meet basic or domestic purchases for the individual which is spread for some time.