Consumer credit – what is it and how does it work?

Times of running around bank branches are history. Managing finances at home, from a mobile device or computer, no one is surprising. The loan market is very crowded these days. There are many different types of loans that we often have difficulty distinguishing between them. When choosing a loan, we must be absolutely certain that the banking product we choose is exactly what we need.

On the Internet, as well as in stationary branches, we will find many offers enabling obtaining the necessary funds – among them there is also a consumer loan for financing current needs otherwise for any purpose. Money from the loan can be used to pay current expenses, buy RTV equipment or a car, as well as to finance foreign holidays or renovating an apartment. Money from the loan is usually paid in cash directly to your hand or via bank transfer.

Definition of consumer credit

Definition of consumer credit

The definition of consumer credit is not included in any law. It can therefore be assumed that this is a certain product category, not a separate product. In practice, it is simply a cash loan or cash loan. By borrowing money from the bank, we can use it for any purpose, ie for a holiday, renovation of a flat or purchase of new electronic equipment.

Cash loans are available at most banks, and best of all – you can also apply for them online or by phone. This will allow you to complete the formalities without leaving home.

Consumer loan – features:

  • The loan is used to finance the current needs of the household;
  • You can borrow money for any purpose;
  • The loan is paid in cash directly to your hand or via bank transfer;
  • Short loan period – usually the loan is granted for a period of one to several years;
  • Low loan amount – The amount granted is determined based on the applicant’s income. The lowest amount you can apply for is USD 500, the highest amount – USD 80,000. The amount available is set by the bank;
  • Credit costs are set individually;
  • All repayment conditions, withdrawal from the contract as well as loan parameters and costs are described in the contract;
  • The loan terms depend on the bank’s internal policy as well as your financial situation and relationship with the bank.

Who can get a consumer loan?

Who can get a consumer loan?

In general, there is no easier way to quickly repair the household budget in the country than a cash loan. We currently distinguish two consumer loans that take both cash and non-cash forms. The first variant is more popular. A person who wants to borrow a cash loan can independently take the funds and spend them on the purchase of the selected good or service. The second option, ie non-cash consumer credit, means that the bank transfers the borrowed capital to the account of the entity selling the product (eg a new car).

Consumer credit is addressed to a wide range of potential borrowers. The aforementioned absence of the need to provide evidence of the use of funds makes it beneficial also for farm owners.

Compared with other loans, it is much easier to get a consumer loan. The borrower can be any natural person with a permanent source of income. Consumer credit means much less formalities. At most banks, you’ll only need to provide your ID card or, optionally, another photo document.

The cheapest loan is definitely the best loan?

More and more people are reaching for a loan, otherwise. This is mainly because many people have more needs. The best and the cheapest solution is to borrow from a loan institution that has the first free loan in its offer. Offers of the first free payday loans are very beneficial for many customers.

The first loan for free is the best offer for people who are surprised by sudden expenses. It is also an ideal option for people who need money for quote for their own expenses. All loan companies grant loans for any purpose.

Many offers with the popular first free loan are available online via the online application. All online loans are primarily a minimum of formalities, flexibility, speed and convenience.

Is the lowest interest rate the most important?

Is the lowest interest rate the most important?

Nowadays, a free loan is very popular. Instant payment means that by borrowing some amount, eg USD 1,000. You pay back the same after 30 days. These are loans for 0 USD, with no hidden costs. Anyone over the age of 18 can count on a free loan. Promotional loans are available to first customers who apply for a loan.

Loan companies grant quick loans over the internet with a minimum of formalities. This is the most interesting solution that primarily provides the opportunity to use the money for any purpose.

The most important and basic parameter in the case of loans via the Internet is the interest rate. The interest rate is the most frequently used measure of the cost of credit. The most important components of interest below:

In practice, the loan involves many additional fees associated with taking it. The total cost of the loan is not only the amount itself, but also the preparation fees, loan insurance fees, and telephone prompt fees. As well as fees for sending calls for payment of installments and fees related to the visit of debt collectors in the absence of repayments.

APRC is the sum of all costs to be paid, referred to the credit / loan taken and expressed as a percentage on an annual basis. The APRC takes into account the total cost of the loan – interest, commissions, other fees and insurance.

Hidden costs of loans

Hidden costs of loans

Interest or commission are two key elements of any loan. The lower the commission and interest, which are one-digit, the more attractive the loan. Unfortunately, in fact, it may be one of the most expensive offers on the market and the most expensive loan in our life. Below are what to look for when borrowing:

  • application fees (not just for mortgages);
  • administrative fees (loan service, some companies charge an administrative fee of a considerable amount each month, which significantly increases the cost of the loan);
  • contract preparation fee;
  • insurance (the lender does not always inform you that it is already included in the cost);
  • other costs, an example of a fee for establishing additional collateral for a loan.

There are many additional costs that the customer has no idea about. These are the most popular ones that we often meet when taking loans from non-banking companies.