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.