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Who is eligible for consumer credit?

Private lending is one of the pillars of today’s economy. Traditionally, loans have been given by banks, but long-term loans have also been offered by non-bank lenders. There are many types of loans: mortgage, consumer loan, car leasing, quick loan. If you are not a financial professional, understanding the differences between different types of loans can be difficult. The experts at Davis Federa have compiled the most important information on consumer credit that will be of use to anyone. Check out our suggestions!

Alphabet of loans for borrowers

Alphabet of loans for borrowers

In order to find the most advantageous credit option in the wide offer, you need to know how one type of credit differs from another. The reasons why people borrow are varied, so loans are tailored to different situations. Typically, you apply for a credit if:

  • shortage of unexpected expenses;
  • additional amount required for large purchases;
  • wants to pay for the purchase in installments.

Some types of loans are understandable by name: home or car loans, home appliances leasing, study loans. Others, such as consumer credit and fast credit, are not for one specific purpose. An additional difficulty is that these terms are sometimes used interchangeably, even though consumer credit and other forms of credit are not the same.

The most important thing about consumer credit

The most important thing about consumer credit

What is a Consumer Credit? It is a bank or non-bank lenders loan to individuals. A consumer credit is issued for the purpose of purchasing goods or services that improve the quality of life. People with adequate financial standing may consider applying for a loan if money is needed:

  • home repairs;
  • studies;
  • long-term treatment.

To understand what a consumer loan is, let’s compare it to another popular type of loan, fast credit. Consumer credit for individuals varies by:

  • amount of credit. Compared to fast credit, consumer credit provides a loan of up to USD 10,000, which is significantly higher than the total amount of a fast credit loan;
  • repayment term. With a large amount of consumer credit, this term will be much longer;
  • login procedures. If instant loans can be arranged on the Internet, consumer credit is not so easy – not all lenders are ready to grant consumer credit to individuals via the Internet;
  • conditions for granting credit. While consumer credit, like fast credit, does not determine the need for collateral and surety when sorting out these types of loans, special attention is paid to the borrower’s financial position so that no undesirable problems occur during repayment.

Consumer credit is usually larger than fast credit. A large loan amount means a longer repayment period. Davis Federa gives a quick credit for 10 to 30 days, while a consumer credit is repaid within 6 to 60 months.

Applying for a consumer loan takes more time than applying for a quick loan. Although consumer credit has also emerged on the Internet nowadays, a large proportion of lenders work with lenders only in person. Some banks and non-bank lenders offer to apply for a loan online and go to a bank or lender’s office for an interview. When considering a consumer loan application, the following are taken into account:

  • income level;
  • credit history;
  • previous cooperation with the lender.

The amount of the consumer credit depends on all these factors, so at the time of application, it is not known whether the full amount will be granted. The interest rate on consumer loans is most often determined individually, depending on the level of income, the expected maturity and the amount available. The bank may be interested in the purpose of using a loan, which is another difference between a consumer loan and a quick loan. When applying for a quick loan, the borrower does not have to specify the reason for the loan.

Consumer credit on the Internet – an alternative for banks

Consumer credit on the Internet - an alternative for banks

Consumer credit is available not only to banks but also to non-bank lenders. There are lenders in the Latvian market who offer both fast loans and larger consumer loans. Consumer loans on the internet are similar to fast loans in that both types of loans are available without collateral and collateral. However, since the consumer credit is voluminous and takes a long time, the lender has the right to request income information.

Davis Federa recalls that relatively simple application does not mean superficial credit. Before submitting your application, carefully read the credit agreement and read all the loan information. Factors to consider include:

  • total refund amount;
  • loan term and repayment procedure;
  • penalties for failure to meet the deadline;
  • solutions offered by the lender in case of credit default.

However, consumer credit also has its drawbacks, which must be considered before making a loan.

Consumer Credit – Disadvantages of doing it on the Internet

Consumer Credit - Disadvantages of doing it on the Internet

Admittedly, consumer credit has more advantages, but there are also some disadvantages. These are two:

  1. while many borrowers find it advantageous not to talk to a lender, for others it may prove to be a disadvantage, as there are often cases where the help always comes from the classic forms of credit we can obtain from the banking sector lenders;
  2. The credibility of a lender may not always be determined with sufficient certainty and reliability from information available on the Internet. If you arrange a consumer loan with your bank, you will be sure of its reliability. Therefore, when arranging a consumer loan online, the borrower must be especially careful and consult all the information available, especially the testimonials, in order to choose a responsible and reliable lender.

One of the essential rules when arranging a consumer loan is its repayment. What are its types?

Consumer Credit – How to Repay?

Consumer Credit - How to Repay?

In order to avoid any misunderstanding when repaying a consumer loan, you should consider repayment options and choose the most convenient repayment schedule before entering into a contract. There are two possible types of refund:

  • equals. This payment schedule states that the consumer credit you borrow will have to be repaid in equal monthly installments. This means that the monthly loan repayment percentage and interest will be the same for the entire repayment period and will not change;
  • descending. This repayment schedule states that the consumer credit you borrow will have to be repaid each month, with a different amount of principal and interest. Initial payments will be more expensive, but you will have to return much less afterwards. This option will be beneficial for those who may initially spend more on their income to repay the consumer credit.

However, if consumer credit does not seem to be the right option, we suggest you consider a quick credit settlement!

Short term credit for urgent expenses

Short term credit for urgent expenses

We, Davis Federa, a non-bank lender, offer quick loans with a repayment term of 10 to 30 days. This term is much shorter than consumer loans, because quick loans are for other purposes. Davis Federa credit can be applied for:

  • payment of utility bills;
  • Purchase monthly essentials such as medication or public transport tickets
  • to deal with unexpected situations, such as repairing broken pipes.

Fast loans won’t help you deal with a long-term money shortage, so be responsible! Compared to consumer loans, fast loans are smaller in size. Davis Federa can get between $ 50 and $ 300 for his first borrowing, but starting with his second loan, the maximum loan amount increases to $ 425.

Consumer loans on the Internet and in banks can be suitable for people with the right solvency who are planning to make big purchases and want to borrow for a longer period of time. Remember, every credit is a short-term solution that should be used with the same responsibility. Consider applying for a loan before applying for any loan!