Consumer credit is a short-term credit intended to cover the purchase of a service or service. Consumer credit is provided to individuals by banks. The most important amount you can get when applying for a consumer loan will be the regularity and amount of your income, as well as the term for which you are applying for the loan. It is issued without a pledge, but your bank will determine your chances to repay the loan, so you can only take out a consumer loan if you have a regular income. In addition, there are other criteria by which banks evaluate whether and under what conditions to lend you a consumer loan.
To qualify for a consumer credit, you must have:
- Stable income and satisfactory credit history;
- At least ~ 21 years old;
- Identity document (passport);
- Income and Expense Statement if you do not receive pay at the bank where you borrow.
Other conditions often exist, but they can vary depending on where you borrow. It is worth noting that consumer credit has its advantages over other types of credit. It is easier to borrow such a loan than, for example, a mortgage, you get the money right after the contract, etc.
Advantages of consumer credit:
- You can get the funds you need relatively quickly;
- Expected monthly payments;
- There are no conditions as to where the money should be spent;
- Monthly payment decreases if the repayment term is increased;
Consumer credit also has its downsides: you have to pay more money in interest payments than taking a long-term loan, both because banks have a certain amount of risk in consumer credit and because it is a short-term credit. Consumer credit also involves significant one-off ‘invisible’ charges, such as payment for the completion of a contract or for late payment.
In addition, as you borrow from a bank, you also need a guarantor, which is often quite problematic. And of course, consumer credit comes with all the risks associated with credit in general: the debt burden can reduce the quality of life; monthly payments reduce your financial freedom; etc.
When to Borrow Consumer Credit?
A consumer loan can be borrowed in a myriad of situations where you need financial resources and it is not worth listing them because you yourself know what you want to buy with the money you borrow.
The most important thing about borrowing consumer credit as an individual is that you need to be sure that your sources of income will not be lost and that new debt will not make your life unbearable.