Consumer lending is the sale of goods in trade organizations with deferred payments or the provision of cash loans by banks for the purchase of these goods or for other personal needs. It is this wide possibility of using credit funds that allowed consumer loans to acquire a massive character among the able-bodied population of our country.
Types of consumer lending
The range of types of consumer lending provided by banks is constantly expanding. Today, each borrower will be able to choose the most convenient loan product for him - from a classic loan to a loan based on two documents. A consumer loan is most important when buying expensive goods - it can be a car, household appliances, furniture, etc. If a consumer loan is issued for a specific product or service, then this type of borrowing is considered targeted. You can also use the consumer lending service if you just need cash, and spend this money at your own discretion, without reporting to the bank about what exactly they were used for.
The interest rate on a loan for consumer needs can range from 12% to 40% per annum. The size of the interest rate will depend on several factors - the amount of the loan, the number of documents provided and the credit history of the potential borrower. The more documents confirming your employment and income level you can provide to the bank, the lower the loan rate will be. Thus, when applying for an express loan with a minimum package of documents, you should be prepared for the overpayment amount to be more than half of the original loan amount.
General requirements for borrowers
In order to use the classic type of consumer lending, the borrower must meet certain bank requirements. You will need to provide the bank with a certificate of the amount of your income and a certified copy of the work book, which will be a confirmation that you have been working in the last place for at least six months. In this case, the total length of service of a potential borrower must be at least 3 years. Mandatory requirements for obtaining a bank loan also include Russian citizenship, permanent registration and a landline work phone.
Benefits of consumer lending
The main advantage of consumer lending is the ability to immediately get something that would take a long time to save without a loan. In addition, there are times when money is needed right now, for example, many borrowers take from the bank targeted loans for a wedding, education and even for recreation. With the help of a consumer loan, you can solve urgent problems that require significant financial costs, such as repairing a car or apartment. If you provide the bank with a full package of documents, then the amount of overpayment will be quite acceptable, while early repayment will make it less.
Disadvantages of consumer lending
The availability of consumer lending is not only a plus, but also a big minus. So, many citizens are completely unprepared for the fact that, having received the desired amount or thing in half an hour, they will have to pay for it systematically and for a long time. Before you take another consumer loan, you need to calculate the possibilities of your family budget, otherwise such frivolity can turn into serious problems in the form of debt, lawsuits and hopelessly damaged credit history.
