Types and characteristics of consumer loans

Banks normally thrive on the loans and services they provide to businesses. For example, offering funds for new businesses or expansion of some existing business, managing inter-city or international transactions involving large sums, or offering financial advice, etc. However, no bank can completely ignore the individual consumers, as they constitute a large part of the market and are considered an important source of funds for the banks.

With the passage of time, more and more individuals have shown interests in lending from banks, they'll seek loan for a small home-based business, go for a loan for house construction, or even knock at the door of bank when they need a brand new car. Consumer loans differ in sizes and characteristics, ranging from long term huge mortgage loans to small loans taken out for shopping through credit cards.

Consumer loan is different from business loan in many ways. Even though the business loans are borrowed by individuals as well, but people tend to think differently when borrowing for the business as compared to the borrowing for personal use. Consumer loans are thought to be the more risky ones than business loans because individuals defaults (fails to payback) more often than the businesses, that's why consumer loans normally have higher interest rates than the business loan. Also, consumer loan mostly has fixed interest rate.

Different types of loans:
Consumer loans can be divided into different categories. Some commonly known types are …

Credit Cards:
One of the most widely used forms of consumer loan; Credit cards have got such a huge user base because of the convenience factor. People use it for shopping at large retail stores, dining out in restaurants or at petrol pumps. Best thing about these loans is that consumers can avoid the interest altogether by paying back shortly after the transaction, otherwise a small percentage is added into the basic amount on monthly basis as interest.

House Finance or Auto Loans:
Another very important type of loan, house finance or mortgage has helped many to be in possession of their own house. Auto finance is a loan that succeeds in the time of economic growth. However, both of these loans are subject to manipulation by dishonest parties.

Installment vs. Non Installment Loans:
Installment loans are relatively smaller loans which the borrower is required to return in monthly installments, whereas non installment loans are needed to be paid off in a lump sum after a fixed period of time. Most of the time consumer loans fall in “installment based loans” category.

Source:
Whoelsale Suppliers
Wholesale Manufacturers

Choosing the right bank for international trade

International exporters need the services of banks or financial institutions at many stages of their trading business. They need loan to help with initial setup, they need financing for production phase, and they need the services of banks to make or receive payments (letter of credit, wire transfer, etc), they can avail lots of other services like online banking, small business loans, credit cards, etc. When deciding on your bank you should consider following points carefully, because you can't keep changing your bank often.

Interest Rates and Service Fee:

Normally, there’s not much difference between interest rates offered by various banks operating in the same market and circumstances, mainly because of cut throat competition. However, that doesn’t mean you should completely ignore the small differences at hand. Similarly, banks charge different fees for different services, if you have a clear idea of the services you are going to avail, you can easily decide on the most suitable bank. Banks have to rely on these service charges and fees for their profits, but you must make sure that you are not getting ripped off by your personal bank.

Repute & History:

A well reputed bank of good standing will also speak for your business credibility at international export, so you better go for some bank, which is highly regarded among business circles. If you are choosing a bank for long term relations, you should go through its business history, past performance and achievements. Another question to go over is how financially strong that bank is, especially after we have seen more than 15 US banks failures in first three months of 2009. Just because they deal in money, doesn’t mean they’d never run out of it.


Customer Relations & Customer Service:

Good banker-customer relations are a result of mutual understanding and collaboration. Bank staff normally consists of well mannered and courteous individuals; still some banks go that extra mile to please their customers and establish long term relationships. Customer service can slightly vary on branch to branch basis as well. Don’t get overwhelmed by the politeness and the display of utmost sincerity when going through the procedures of opening an account, instead you should talk to some existing customers to make sure they are satisfied with the banking services and the behavior of staff.

In addition to the points described above, you can look for the quality of products and services offered by the bank.