Consumer vs Commercial Loans

Topics: Loan, Credit, Debt Pages: 4 (897 words) Published: December 1, 2012

Prepared By:|  |
 |  |
Rohit Iyer| 11FN-082|
Sahil Gupta| 11IB-069|

Consumer Loans
* Consumer loans are those loans which are required by a person for their personal needs.  * If a car loan(finance or lease) is obtained by a company/individual for commercial purposes it is a commercial finance where as if the same kind of car loan is availed by a an individual who would use that car for his personal needs and would not gonna earn rent from that car that is considered a consumer loan.  Hence, we can say that consumer loans would not become a source of earning for the borrower, * Examples:- Credit Cards, Personal Finance, Car Finance, Mortgage Finance

Features of a personal loan
* Variable interest rate: - A Variable Interest Rate Personal Loan has an interest rate that may change during the loan term. Accordingly your personal loan repayment may change throughout the life of the loan. With Variable Interest Rate Personal Loans you can make early or additional repayments without incurring any penalties.

* Fixed interest rate: - A Fixed Interest Rate Personal Loan has an interest rate that stays the same for the full loan term. The loan repayment should not change due to interest rate changes throughout the full term of the loan. With a Fixed Interest Rate Personal Loan you cannot pay extra to get ahead in your repayments. The repayment amount specified in your loan contract needs to be paid each week, fortnight or month as per the arrangement until the loan is paid in full. If additional payments are made, charges may be incurred.

* Secured: - A secured personal loan is a loan in which the borrower pledges an asset eg a car or property as collateral for the loan. The debt is then secured against the collateral so in the event that the borrower defaults the lender can take possession of the asset used as collateral and may sell it to satisfy the debt by regaining the...
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