Borrow online It is one of the most popular and widely used forms of loans today. However, not everyone understands about consumer loans. To avoid possible risks in the process of using this form of loan, please follow the article to share information about consumer loans with Vayonline below.
What is a consumer loan?
Consumer loan is simply understood as a form of loan to support customers (be it individuals or households) to use for their consumption needs in life such as: paying tuition fees, traveling. , pay hospital fees, buy a car, etc. Lenders are usually banks or financial support companies, each unit will have its own policy and regulations for its customers.
Features of consumer loans:
- Customers will not need to prove their loan purpose.
- The lender may not need the borrower to secure the property, but only needs to be based on the creditworthiness and ability to repay the loan to approve that loan.
- Loan procedures are usually quite simple, do not need too many cumbersome documents, so it is very suitable for loans quick loan.
- Time to disburse incense, usually only after 2-3 days after receiving and approving the application.
- The loan amount is small, depending on the borrower’s ability to repay.
- Interest rates on consumer loans will usually be higher than those on commercial loans.
- The source of repayment of the customer’s debt is deducted from income, not necessarily from the interest of the result of using that loan.
Types of consumer loans are commonly used today
Unsecured consumer loan
An unsecured loan is a form of loan where customers do not need to be secured by assets, but only need to prove their income and ability to repay the debt. In addition to the source of income, documents such as life insurance, business licenses, credit lines, etc. are also considered as a way to prove the customer’s ability to repay the loan to the lender.
Advantages of unsecured loans:
- Serving needs quick loan of customers when it does not need much time and procedures like other forms of loans.
- There is no need to secure the loan with property.
- It is not necessary to provide the purpose of using the loan source.
- Flexible loan form: Can online loans or borrow directly
See more: Borrow money online what?
Mortgage consumer loan
Mortgage loan is a form of loan that customers need to secure with their assets. Lenders will determine whether the loan is large or not based on the property value, usually higher than unsecured loans and also lower interest rates.
Advantages of mortgage loans:
- Large loan amount, can be up to 70% – 80% of the value of the collateral.
- Loan interest rates are usually lower than unsecured loans.
- The loan term is also quite long, can be up to 35 months
Overdraft consumer loan
This is a form of loan that banks provide to allow customers to spend more than the amount of money in their account. Thus, the bank will provide a maximum limit that customers can spend over the threshold when their checking account has zero balance.
Benefits of an overdraft loan:
- Money can be used to pay even if the account has no money, meeting the needs of instant money.
- The overdraft limit is quite high, up to 5 times the customer’s income
- There is no need to secure an overdraft with assets.
Notes when taking out a consumer loan
- Choose the right type of loan: Customers should carefully study the types of consumer loans, about the advantages and disadvantages before deciding to choose the right loan for them.
- Consider your ability to repay before taking out a loan: Consider in advance your ability to repay in accordance with the terms of the contract to see if you can meet it or not. Limiting the appearance of bad debt when unable to repay, this will greatly affect the future of customers when they want to borrow money at any financial institution.
- Choosing a reputable lender: Although there are now many reputable consumer lenders in the market, there are still many black credit parties for borrow money online With a low reputation and always waiting for customers to fall into a trap, you should consider carefully before choosing a unit to borrow money.
Here is the information about Consumer loans: Concept, characteristics, loan forms and notes when borrowing. Hopefully, the sharing in the article has helped you better understand this type of loan so that you can make appropriate loan options.
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