In the context of consumer credit, it is a loan granted to a consumer for a loan or other financial arrangement for consumption. Consumer loans are secured as well as unsecured.
Consumer credit is usually used for everyday purchases such as home appliances and furniture or even for refurbishment. However, it is also suitable for financing other major one-off purchases, such as a boat, car, or vacation.
Compared to a mortgage loan, a consumer loan is more flexible and quicker to obtain because it has lighter criteria and lower amounts. Also, consumer credit is not tied to a purchase, but is freely available.
Consumer credit is also granted more quickly, with fewer criteria and smaller amounts than mortgages. Typically, the maximum amount of consumer credit granted is EUR 50,000. Consumer credit is usually applied for by financial companies, but also granted by banks.
Who can apply for consumer credit?
The criteria and prices for granting consumer credit vary depending on the financial company. Sometimes small loans can also be granted to the unemployed and students. Usually the applicant must also have a good credit history. However, it should be borne in mind that new lenders are constantly coming in, which is why the rates and award criteria must always be reviewed directly by the finance company.
At Herne the Hunter Ekonom we provide consumer loans to people aged 20-73 with a regular income of at least € 18,000 a year. A person with a payment default entry can also get a loan from us as long as there are no more than two entries and they have been taken care of.
A checklist for those considering a consumer credit
It is not advisable to take consumer credit at the whim of a moment. If you are considering taking out a consumer credit, keep in mind the following:
Think about why you are applying for consumer credit
What is the reason why you want to apply for consumer credit? Need a new washing machine or do you want to go on vacation? First, identify what your consumer credit needs are and what you really need. Apply for credit only when you really need it.
Verify your ability to pay
Find out your net income and subtract your compulsory spend from the amount. Compulsory expenditure includes, for example, housing, food, insurance, electricity and telephone bills. Lower your spending slightly to the top rather than the bottom. This will ensure that you are confident in paying off your consumer credit. Here are tips for managing your finances.
Think about what kind of consumer credit would work best for you
There are different types of consumer credit, such as a one-time loan or a flexible loan, where you can extend your loan as you repay it. Find out the features of different consumer loans and choose the one that suits you best.
Uncompetitive Credit Providers
Before choosing a consumer credit provider, it is a good idea to get to know your options and to compete with finance companies. This will ensure that you get the best possible loan at a good price. When considering the different options, be sure to consider all the costs of the loan, including the interest rate and also the cost of servicing the loan. When comparing, it is always worth looking at the actual annual interest rates for different loans. The loan calculator will help you to figure out the total cost of a loan.
Get to Know Your Lender
Get to know the finance company where you are going to apply for the consumer credit. It would be a good idea to have a customer service company in the finance company and to reach them easily. This way you can contact customer service immediately if you need to negotiate a new payment plan or have any other questions. Also, make sure that you have the opportunity to repay the loan early, at no additional cost.
Consider applying for a loan with a solidarity applicant
If possible, you should apply for a consumer credit with a solidarity applicant. In this case, you are jointly responsible for the credit, which means, for example, that the risks associated with repayment are lower . Here you will find more information about the role of solidarity in the loan application.