Consumer vs Commercial Loans

CONSUMER LOANS VS COMMERCIAL LOANS Prep argond By Rohit Iyer 11FN-082 Sahil Gupta 11IB-069 Consumer gives * Consumer contributewords are those loans which are undeniable by a person for their personal necessitates. * If a car loan(finance or lease) is obtained by a compevery/individual for commercialized purposes it is a commercial finance where as if the alike kind of car loan is availed by a an individual who would use that car for his personal needs and would non gonna earn rent from that car that is considered a consumer loan.Hence, we rear say that consumer loans would non become a source of earning for the borrower, * Examples- Credit Cards, Personal Finance, Car Finance, owe Finance Features of a personal loan * Variable interest group swan A Variable involution Rate Personal Loan has an interest rate that may reposition during the loan term. Accordingly your personal loan repayment may change throughout the life of the loan. With Variable Interest Rate Pers onal Loans you can make early or special repayments without incurring any penalties. located interest rate A Fixed Interest Rate Personal Loan has an interest rate that waistcloth the same for the full loan term. The loan repayment should non change due to interest rate changes throughout the full term of the loan. With a Fixed Interest Rate Personal Loan you cannot pay tautological 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 ar be sickment 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 validating for the loan. The debt is then secured against the collateral so in the in timet that the borrower defaults the lender can take possession of the asset employ as collateral and may sell it to satisfy the debt by indemnity the amount ori ginally lent to the borrower. * Unsecured An unsecured personal loan requires no collateral or security. This type of loan is supported whole by the borrowers creditworthiness, rather than an item of collateral. Advantages Personal loans do not require you to produce any collateral or security, like some other loans. * There is no agent or middleman while obtaining this loan. * Banks are always ready to offer personal loans. * All that is required is that you need to satisfy the eligibility criteria. * You may use the loan for educational or even holiday purposes. * You can avail a personal loan during measure of emergency when you are short of cash, since you need not answer to a fault many questions to the bank. * You may avail personal loans according to your eligibility ranging anywhere from Rs. 5,000 to Rs. 10,00,000. * It is divulge to avail a personal loan than to borrow cash on your credit card comparing the interest rate on both. Disadvantages * The eligibility crite ria are stricter in case of personal loans, since there is no security required and the paper work is minimum. * The bank checks on you capability to repay more than than any other loan due to the same reason. * Since the bank has a higher risk while providing personal loans, they follow a magnetic dip of approved categories of borrowers. Interest rates for personal loans could range from 12 % to 30 %, while the service charges and prepayment penalty are also very high. commercial Loans * Commercial Loans are for phone line purposes. Usually given tocompaniesto meet their diverse business needs. * This category of loan is introduced with the aim to help establishments sustain and grow. * Examples- political campaign Finance, Cash Finance, Term Finance, Export Finance, FATR, FAPC II etc Some of its salient features can be described as below Unrestricted funds specie extendable under the commercial loans program has no restrictions. A business organization that is eligible for extended line of credit can inescapably find large amount transferred to its bank account. The money can range from small dollar amounts to large sums. * Online Application Filing of online lotion for grants is possible. line of products owners just need to fill in an online form and submit the same with required documents. * Repayment Assurance An enterprise owner has to provide bureau of repayment to the lender.This can be done by offering collateral support, credit card, property documents or any other valuables that provide full assurance. Funds drawn against repayment assurances are kept extended. * Not limiting to Business Types Commercial loans are available to all categories of entrepreneurs without restriction. It means that anyone from any industry can apply for finances. It is unimaginative how this loan support plant life for all. Just anyone can qualify irrespective of the industry type, small business or large organization. * 24 x7 hr Approval Business Loan appr oval is kept open for 24 hours.So, any entrepreneur in an immediate need can apply for the grant. Banks are not imaginative and so deploy their work force on a 247 hr basis to get an organization funded. It is also true(a) that the support staff does all the nitty-gritty, goes through the details, conducts enquiries, and then forwards the application to make grants available. * Good Credit Scores Required Financers look for favourable credit scores before granting loan to an organization. So, an enterprise should work heavy(a) to build up its credit scores. Statistical Data