1.2 million people were granted consumer loans in 2017 according to figures. This is 34% of all applications submitted according to the figures. In other words, if you apply for a consumer loan, you will not be granted the application. Banks and loan intermediaries demand more from loan applicants now than before.
You must meet the minimum age, income, remittance, citizenship and address requirements. In addition, the government is tightening up by demanding repayment of the loan within 5 years and no installment-free periods. If you have already taken out a consumer loan, you probably have noticed that you could set the repayment period to a maximum of 15 years. Not all banks allow this anymore. This will limit growth in consumer loans.
Have you ever wondered what the consumer loan is used for?
In this post, we go through the more typical areas where the consumer loan is used. Most of us have no problem spending money, but not all uses are just as sensible. Read on and see which applications are best for you.
Refinancing means that you take up new debt and use that debt to pay off more expensive debt, which you already have. The whole point of refinancing is that you borrow money that is cheaper to repay money that costs you more to borrow. In its 2015 survey on the use of consumer loans, the Institute of Consumer Research, writes that 30% of all borrowers who use consumer loans spend their money on refinancing their debt.
When you refinance it is also very convenient to get all your loans in one place. If you have five credit cards, you get five bills each month. If it is difficult to pay on all the cards every single month, you can quickly get into a situation where you get five phones several times a week from different companies that want to get paid. Refinance you stop all these banks from calling. You only report to one bank, compared to five banks, while paying money to only one bank.
If you want to buy a house or apartment it is very easy to go and find different houses and apartments that are just the way you want them. Finding the dream home can be tricky when you also look at how much it costs to buy a house. The purchase price itself does not necessarily have to be the worst.
The toughest thing about buying a house and apartment today is that you have to pay 15% of the purchase price yourself. This 15 percent is called equity and all banks are required to claim 15% of you when you want mortgages.
Many people believe that consumer loans are designed to lend money to consumers. It is not correct. Consumer loans are a term that has been placed on unsecured loans. People who take out consumer loans do not have to provide any security, except for themselves, to borrow money.
When you buy a house you do not get millions of dollars to buy you a house without a hitch. Here you have to give the bank security for the money in the house. Generally speaking, loans cause the bank that gives you loans to limit what you can use the money for due to the security they take in the purchase item.
Travel and holidays
People love to travel and relax. Having such an attitude is no problem. Not everyone can afford to travel or go on the vacation they want. That’s why 17% of people with consumer loans spend their money on just travel and holidays, according to 2015 survey. There are so many great places to travel in the world. If you like city holidays, wild areas or rural areas you can find this on the internet.
Everyone has a private economy. Someone’s finances are quite solid and can take a turn if there are changes in the person’s financial situation. An example is that the person loses the job and the income goes down. Others already have a rather fragile economy, which means that a slight change in a person’s private economy can make a dramatic impact. 20% of those who take out consumer loans spend the money on what is called an extra buffer according to report.
The buffer can be so many. One way to get ready for unforeseen costs is to put some money into an account to leave them there. Other buffers are that you already have unforeseen costs and need money to pay them.
A larger share now than before of people with consumer loans states that they spend their money on something else. This is a fairly large category, but we see that more and more people are borrowing to spend their money on investment. One type of investment is that the money is spent on starting a company.
If you are a founder or go around with an idea that you would like to perform then you should think about whether consumer loans are a good way for you to get started.
Another aspect of consumer loans and investments is to take out a consumer loan with a reasonable interest rate and buy shares on the stock exchange for the sum. It can be quite risky if you don’t know very much about the company you invest in.
Similarly, some also use consumer loans to invest in new areas such as cryptocurrency and blockchain technology. The cryptocurrency has gone very up and down, providing good investment opportunities for those who dare and take the chance.