DEFINITION

A consumer loan is money lent by a creditor to a borrower for a period of time, with the expectation that the borrower will pay it back at the end of the set period of time. The purpose of taking out a consumer loan is to buy goods.

EXPLANATION

The consumer loan can fall into one of two categories: credit in a single payment or credit in installments. Generally, the borrower goes to the creditor with a reason, to borrow a certain amount of money. After a period of time, and during that period with regular installments, the borrower pays the creditor the principal and, if it is part of the terms of the loan, also pays the interest. Some examples of consumer loans are consumer loans to buy household appliances and loans to buy a car. In some cases, the stores themselves offer this type of credit.

RESULT

The ability to use a consumer loan to purchase a durable good that you would not have been able to purchase without a loan is highly valued. The guarantee to pay the creditor is reflected not only in his honor but also in his credit history, which is why it is very important to know his personality and financial solvency and be sure that he will be able to pay.