For those people who want real comfort at home or who want to set up a small business or expanding their existing businesses, the consumer loans are a real blessing for them. Obviously, other little amenities can be purchased where an individual consumer is concerned i.e. a consumer who cannot give little amenities of the house from a running wage. Moreover, banks also get great benefit from these loans since they are numerous and have a high demand. Consumer loans are very helpful for both the consumers as well as the banks since they comprise a large part of the banks and are considered an crucial source of financial backing for them as well.

As banks have grown in business, more and more consumers have shown their interest in lending from them. Customers use these loans to purchase a car, or put up a small home-based business.

Consumer loan is different from a business loan. Business loans are also borrowed by individuals if they are compulsory for any small purpose. Consumer loans themselves have a variety of forms, for example these loans range from long term mortgage loans to small term loans such as those needed for credit card shopping.

Generally, consumer loans are thought to be more risky as compared to business loans because of the high default rate from the consumer’s end. This is the reason why consumer loans have a higher interest rate associated with them as compared to a business loan. Also, the consumer also has a fixed interest rate to pay.

There are different categories of consumer loan for example credit cards. Credit cards have a huge user base and a great demand along with a variety of features as it provides a multitude of factors to an average consumer. Credit cards have a high demand because they are used for shopping, at petrol pumps and even for buying home appliances and electronics on instalments.

There are auto loans as well where the house finance or mortgage has helped out many people to get the possession of their houses back. Lately, these loans have been associated with more stringent rules and regulations since people have noticed a high default rate associated with that.

There is also a category of instalment loans which are relatively smaller loans where the borrower is required to pay back the required loan in monthly instalments. Other category of loans is those which are required to be paid in a fixed lump sum amount in a certain prescribed period of time.

Loans are a great facility to be availed but they should only be availed in case of dire need since paying interest payments and principal amount can cause a heavy toll on your already existing expenses.