Since many potential customers want innovative, tailored solutions, banks and financial institutions have strived to provide unique services. One such emerging concept in the banking landscape is Consumer Lending.
What is consumer lending?
The financial industry is changing to keep up with the changing trends in consumer lending. Lending isn’t a new concept. However, the digitized consumer lending industry is very appealing to startups. Consumer lending is a type of lending that focuses on individuals and household customers. It includes home and auto loans and personal loans that are given to individuals or families for personal or family purposes.
The growth of lending companies in India has been sparked by a large portion of the population being internet users, the rapid proliferation of smartphones, and changes in consumerism. There has also been a rise in the usage of consumer lending software and tools.
Where are consumer lending services available?
Consumer lending companies make financial services affordable to most people, promoting financial inclusion and broadening the financial system’s capital base. Consumer lending is used to fund personal, family, or household needs. Loans can be obtained from various sources, including financial institutions and online lending platforms.
Many of these loans are unsecured, meaning they don’t require any collateral, but some, such as auto loans, do require some form of collateral to guarantee loan repayment.
Among the various types of consumer loans available are:
Personal Loans:
This type of loan usually only requires the customer’s signature on a promise to repay the loan. To determine eligibility and the applicable interest rate, the lender considers the consumer’s credit score, among other things. Unsecured loans are the most common type of loan on this list.
Home and equity loans:
The consumer receives the loan in one lump sum with a fixed interest rate. To secure the loan, the borrower’s home equity is used as collateral to secure the loan to secure the loan. This is one of the most frequently availed loans. The consumer lending software and tools hold the database for interests and collateral. With this database, organizations can manage tasks.
Auto loans:
These are a type of consumer loan that can be used to buy a new or used car. A lien is placed on the vehicle being purchased to secure these loans. The loan’s interest rate is determined by various factors, including the borrower’s credit score, and the loan term can range from 12 to 72 months.
Bottom line:
Banks serve a large portion of the global population with various services. A typical bank setup has evolved far ahead of just providing deposit services and loan facilities with innovative tools and consumer lending software.
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