Consumer credit is a concept widely used in the banking sector when we talk about granting or requesting financing. However, ordinary citizens can misunderstand it due to the large number of loan modalities in the market. In this article we will define the concept of consumer credit and discuss the difference between the different types of consumer loans that exist in Spain.
What is a consumer credit?
When banks talk about the launch of a new loan or credit, they refer to it as a consumer credit. Consumer loans are all those loans that are used to buy a product or service to consume. For example, the purchase of a car, furniture, appliances or cover expenses of a home renovation or medical operations. Therefore, loans to create or manage a business would be excluded from this group. The borrower agrees to return the money within a certain term and certain installments, which generally entails the payment of interest.
Consumer loans can be requested at any credit institution, either a bank or a financial credit institution (EFC). Both entities are supervised by the Agree Bank and have the necessary regulation to offer this product. The regulations regarding these products are regulated by Law 16/2011, of June 24, on consumer credit agreements.
Types of consumer loans
In Spain there are 3 types of consumer loans mainly: the personal loan, fast credit and revolving credit or line of credit. Next we will comment on the different types of consumer loans and how each one differs.
The personal loan is the most common form of consumer credit. Like any financing concession operation, the financial institution makes available to a client a certain amount of money at the beginning of the operation, with the obligation that the client returns that amount, together with the agreed interests, within the stipulated period. The loan repayment will be made through constant installments depending on the term and the amount stipulated.
Personal loans are granted both by traditional banks and by financial credit institutions. The amounts granted are usually large, starting at 2,000 or 3,000 dollars up to approximately 60,000 dollars. The same happens with the term, starting from 1 or 2 years, up to 6, 7 or even 8 years.
In order to apply for a personal loan, they must meet a series of requirements, which are summarized in having stable and sufficient monthly income, having a positive bank history and not being included in a list of delinquents. The financial institution will verify that you meet all these criteria through its risk analysis department. Due to these formalities, the personal loan takes a couple of weeks to be approved or rejected.
You can find here our ranking with the best personal loans in the market.
Fast credits allow us to request a small amount of money (up to $ 1,000) that must be returned in a short period of time (approximately 30 days). In a few minutes we get both a response to the request, and also (if granted) the availability of money in our bank account. Unlike personal loans, fast loans can be granted to people who are registered in delinquent files. Precisely to give them a solution to get out of that situation.
For the most part, fast loans are requested through the internet, where you can find promotions in which the first loan does not involve the payment of interest, such as Pennyman.You can find and compare the conditions of a large number of fast credits in the Pocketrest Credit comparator.
The most popular name to refer to revolving credit is the credit line. Credit lines are a loan modality in which the client can freely dispose of the money he needs at any time, without signing a new contract each time. There is a limit amount that the customer will not be able to exceed, unless he is returning the borrowed money. Revolving credits can be used as a means of payment in establishments or to have cash at ATMs.