Hello, hello, hello, this is your friendly neighborhood senior high school student, Frank. I am simply on fire today~! On my second article for the day, we are going to be discussing what is a consumer loan! Because my good friend, you might have come across this term while browsing through the market, while looking for any possible lending candidates!
Anyway! If you are not yet familiar with all the different types of loans, well, do not worry your pretty little head, my good reader, because after I am done with this article, I will have given you a proper overview of all the different kinds available within the loaning market!
As a side note, I will be leaving links to other loan or business-type articles made by yours truly so that you can get to reading them and overall be able to familiarize yourself more to the different types!
What Is A Consumer Loan?
If you did not know yet, which totally makes sense by the way, that is why you are here. A consumer loan is a type of loan that is specifically rooted to giving consumers the financial funds they will be needing for all kinds of specific types of monetary expenditures!
To clear things up, consumer loans are simply just any type of loan given to a ‘consumer’ by a creditor to be used for consumer purposes.
Read also: “What Is A Benefit Of Obtaining A Personal Loan? (2022)”
What Is A Consumer Loan’s Different Types?
Well, to elaborate more on what I said up above, when asking what is a consumer loan, we cannot be as resolute in defining one specific purpose for it because it accomplishes and encompasses a lot of different things. That in such a case, it would make no sense to categorize all of them as what I said in “What Is A Consumer Loan?”
Here is a small definition list for all of the most common types of consumer loans:
Mortgages – is a consumer loan that is specifically financed to someone seeking to purchase a house.
Credit Cards – is a type of consumer loan that finances the purchases of the everyday working person.
Auto Loans – from the word ‘auto’, it is related to vehicles. It is a type of consumer loan that is specifically used to finance someone’s purchase of a vehicle.
Student Loans – the dreaded student loans, ‘consumer’ of all your time and money for a really long time, this is a type of consumer loan that is most specifically used to finance the education of the borrower.
Personal Loans – this is more of the miscellaneous things that a consumer might need funds for, for whatever personal purpose they might have.
So, essentially, the things you might have thought being an actual separate genre of loans, might actually just be a narrower part of a consumer loan!
Read also: “Ever Wonder How To Get A Loan From Cash App? (2022)”
Two Categories of Consumer Loans
When you ask what is a consumer loan, you still have quite a few things to discover and think about! And that is the presence of secured consumer loans and unsecured consumer loans. You see, the people that know what is a consumer loan usually are also familiar enough with these two categories.
You might even consider them highly qualified borrowers, or in essence, they have a high credit score. Meaning more opportunities for other types of consumer loans are open to them.
And while speaking of qualification, this matters very very much when talking about secured and unsecured loans!
Secured Consumer Loans – are loans that are “secured” or in other words, protected transaction-wise by the borrower providing something that could work as collateral (any type of asset that has an inherent value that will be kept by the lender as a sort of hostage). This is because many lenders think of it as, “what is a consumer loan without the proper security in dealt transactions!” So when the lenders do finally verify that you are very much willing to set your asset on the line in the case that the transaction falls through and you flake, they will still find solace in the fact that they haven’t suffered any loses, since they did gain your asset in return!
Unsecured Consumer Loans – this is pretty much just the opposite of the standard secured consumer loan. These do not require being secured by the collateral of the borrower.
Difference? Secured consumer loans are less strict with proper requirements and are a lot more willing to fund greater amounts of money to the borrower because they have a social safety net in the form of the borrower’s collateral. This isn’t the case in unsecured consumer loans, you do not have to put any asset on the line. This means that the lenders will need to be more careful and much more strict to anyone wanting to apply for a loan, just to make sure that they will not get robbed.
Conclusion
If you are wondering what is a consumer loan, then I am the guy you should talk to! With my comprehensive list, and great definitions, you have already been given the things you need to properly find out what is a consumer loan.
Read also: “4 Tips On How Can You Reduce Your Total Loan Cost?”
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