UNITED STATES—Nowadays, consumer loans become widely used around the world and make about 80 percent of all credit requests. The consumer lending has become especially widespread in developed countries because this tool increased the market capacity for a whole range of consumer goods. Consumer loans widely contribute to the increase of demand, the development of the economy, and the well-being of the population. Let’s study the positive impact of consumer loans on the world economy.
What Is the Positive Impact of Lending?
Consumer lending accelerates the obtaining of necessary goods or services that people could have only in the future. Their issuance to the population, on the one hand, increases its current demand and living standards, on the other hand, it accelerates the sale of services and helps increase the capital of manufacturers around the world. This argument is proved by increasing demand for the best online loans issued by cashspotusa.com service.
The growth of the welfare of the population is the most important factor in the development of consumer lending. For example, look at the statistic given below to make sure:
- In the USA, approximately 70 percent of the population has credit cards and ongoing loans. Moreover, there are up to 5.8 cards with active credit limits per single American.
- In Argentina, everyone takes loans. The inflation rate in this country fluctuates at 30 percent per year, so making a purchase now and paying for it with cheaper money in 6 months is beneficial for any consumer. In addition, a special governmental program allows Argentinians not to pay taxes when paying off a loan.
- In Sweden, students try to live separately from their parents and satisfy their consuming needs themselves. The average loan commitment per college student in Sweden is approximately $14,800 per year.
- In Germany, about 18 percent of the young population buy their first furniture or household appliances on credit. With age, the number of people living in installments increases.
Both in the USA and EU, short-time online lending is in high demand (7 to 45 days) with a loan limit of 200 to 600 dollars. This is very convenient when you need to borrow some money for unexpected purchases of household appliances on sale. So, the positive impact of consumer lending is obvious.
Types and Goals of the Consumer Loan
People use credit money for different purposes. Most financial institutions learned to define the specific needs of their clients and offer them exclusive deals for these purposes. So, based on the goal of taking a consumer loan, we can define the following types:
- A targeted loan (household goods, appliances, repairs, car loans, clothing, etc.);
- A consumer credit of an investment nature (education, start-ups, etc.);
- A non-target loan (for any needs).
In the case of target lending, a bank or credit institution transfers money to the client’s or the trading company’s account where you buy the product.
Consumer credit is often used to purchase:
- Household appliances;
- Vacation tours;
- Air tickets, etc.
The borrower has a right not to disclose the purpose of the credit. In this case, he/she takes a non-target loan, which is easier and faster to arrange, but it will cost more due to the higher interest rate. At the same time, the non-target loans carry some risks for financial institutions.
Advantages of Consumer Loans
It is obvious that consumer lending has a number of advantages that attract so many people. From our perspective, the following points are good arguments in favor of consumer loan:
- Protection against rising prices. Of course, this point may turn out to be a drawback because the price may drop as well.
- You will not experience any discomfort due to the lack of necessary goods.
- It becomes possible to buy goods in the current period even without enough money.
- The ability to repay a debt in small parts.
Many people cannot save. They spend money on different goods and services, so there is nothing left to make savings. It is possible to save with consumer credit but in the reverse order. You just need to make regular payments and enjoy using your goods.
Refinancing of Your Current Debts
A consumer loan is often taken to refinance debt for expiring or overdue loans. Overdue loans are often reflected in credit history, which negatively affects the issuance of the following loans. As you know, lenders prefer working with responsible borrowers rather than taking risks. Indeed, the higher the credit risk is, the worse the loan conditions are. For example, it affects an increased interest rate and time restrictions.
Overdue loans usually occur for the following reasons:
- Poverty (lack of funds for essential goods);
- Job or income loss;
- Getting injury at work;
- Borrower’s death;
- Lack of responsibility;
- Temporary circumstances.
However, no reason allows the debtor not to pay off the loan. Each cent received from the lender must be returned in full and with interest. This is the reason why consumer loans may be a solution to the problem.
To get a consumer loan, you can visit the favorable bank, micro-finance organization or pawnshop. If you have enough time, use it to check the best conditions and calculate the interest rates you need to pay for a loan. Your conscientiousness and smart approach will make your life easier.
Does consumer lending have a positive impact on the global economy? We believe, it does. Moreover, it is a perfect tool to cover all the necessary needs of the population. The fast-growing economies of today prove that the lending market has not reached its maximum and continues to develop. Meanwhile, it improves our well-being. Thanks to customer lending we can live in the future today but pay for it tomorrow. Doesn’t it sound great? What are your reasons to take a consumer loan? Feel free to share your ideas with us in the comments.