What Is Consumer Lending?
Consumer lending is the financing category focused on individual consumers and household. It includes home and auto loans and personal loans extended to people who use the funds for individual or family purposes.
Secured Consumer Loans
Consumer loan includes types of secured and unsecured loans, according to the US Legal site. Consumer loan insurance includes financing backed by a guarantee. House, cars and boats are common items of personal property acquired by consumer loans. These are secured loans because the consumer puts the property as collateral to gain access to funding or to obtain better rates and terms.
Home equity loans and lines of credit are other examples of secured consumer loans. With these types of loans, homeowners assume another property warranty for access to affordable financing based on the equity value of their homes.
Banks have less risk with secured loans because they have the right to repossess your property if you fail to pay. It is common that people use this type of financing to acquire important assets that cannot buy with money. A reasonable interest rate allows consumers to borrow and pay the debt over time.
Unsecured loans to consumers
A loan without collateral is consumer financing that does not require collateral. Personal loans and credit cards are examples of unsecured consumer loans. Because banks do not require collateral to obtain financing, interest rates are usually higher with unsecured loans. Lending decisions are based largely on credit rating and income of the borrower. It is difficult for someone with bad credit to get an unsecured personal loan. If funding is obtained, interest rates are often high compared to secured loans, and the interest paid over time is also high.
The loan amounts offered by unsecured loans consumer range. Wells Fargo, for example, offers personal loans, ranging from $ 3,000 to $ 100,000 from the time of publication. The largest borrower’s income and assets, the greater the potential loans. Small loans are granted usually within hours or days.http://www.publicprivatefinance.com/what-is-consumer-lending.htmlPersonal Financeconsumer lending