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Consumer Credit: Explanation, Features, Types

Consumer credit: explanation, features, types

Consumer credit is a loan that is issued to citizens or households for the purchase of consumer goods. Such a loan can be spent on durable goods, such as cars, apartments, furniture, and on less significant purchases (products, household appliances, etc.).

Consumer credit can be presented as a deferment of payment or as a bank loan (including through credit cards ). For the use of money the borrower pays a percentage of the loan amount.

Loan cost

Loan cost

The cost of the loan can be increased due to additional fees and commissions. Such costs form a hidden interest rate. Now in Russia there is a law under which all banks are obliged to disclose to customers the true cost of a loan, which is called the effective interest rate.

It includes the cost of the loan with additional fees. Client’s access to complete information about the terms of borrowing allows him to calculate his opportunities and choose the most profitable banking offers.

The conditions for obtaining a loan depend not only on the bank, but also on the seller with whom it cooperates. Long-term relationships allow bank partners to influence credit offers. One of the options for a consumer loan is an installment plan, in which some part of the interest debt is paid through a discount provided by a trading company.

Types of consumer loans

Types of consumer loans

Usually consumer loans are divided into target and non-target. The first differ in that they can be made out only for a specific purchase. There is also a classification by the presence of collateral.

Unsecured collateral or guarantee loans are more expensive and more difficult to obtain. For the duration of the loan allocate long-, medium-and short-term borrowing. By type of lender – bank and non-bank loans.

Consumer loans for any purpose

Consumer loans for any purpose

Cash loan

 

East Bank
  • According to 1 document;
  • Up to 1 000 000;
  • For any purpose;
  • Solution in 5 minutes.

Request

Loan secured +

 

East Bank
  • From 9.9% per annum;
  • Up to 30 000 000 ₽;
  • Real estate pledge;
  • Fast decision.

Request

Cash loan

OTP Bank
  • From 11.5% per annum;
  • Up to 1 000 000;
  • For any purpose;
  • Quick review.

Request

Advantages and disadvantages

Advantages and disadvantages

Purchasing goods on credit helps to protect oneself from the rise in price of goods in the future, as well as from the risk of goods disappearing from sale after some time.

Buying on credit gives you the opportunity to get the thing at the moment of its greatest importance to the consumer. Moreover, such an acquisition is paid for in small payments over a period of time.

The disadvantages of consumer lending need to include the fact that the loan increases the cost of things. From a psychological point of view, the disadvantage is the completion of the period of satisfaction from the purchase long before the loan payments are fully repaid.

There is also a risk of overpaying for a loan if the real interest rate is disguised or if the borrower violates the terms of the loan agreement.

 

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