A consumer credit (commonly called “consumer credit”) is a loan granted by a financial organization to an individual. It is a contract clearly stipulating that an amount is granted and that this sum accompanied by interest must be reimbursed by installment payment to the lending organization. (monthly deadlines).
It is a loan granted for the purchase of a specific good or service, the most common example is car credit. It is said to be “affected” because the sum lent cannot be used for anything other than the purchase provided for in the contract. (If you take out a car loan, you are not entitled to pay for a trip with the sum made available to you).
The amount that is granted can be used by the borrower as he sees fit, (make up a bank overdraft for example or pay his taxes). With regard to unallocated appropriations, it is useful to make a distinction between two sub-categories.
Knowing that depending on the type of credit, interest rates can vary considerably. It is advisable to contract a loan in adequacy with the need.
1st case: For the purchase of a specific asset such as a car, it is necessary to take out an assigned credit, in this case a car loan. The rate will be lower than that of a personal loan.
2nd case: A need for cash can be the subject of a personal loan, certainly the cost will be higher than that of the 1st case, but much more interesting than that of a revolving credit.
3rd case: Consumers wishing to be able to buy a good or service at any time without taking out “classic” consumer credit. May use revolving credit. However, be aware that interest rates are very high. The only advantage of this type of financing is the possibility of having the desired amount immediately.