How to choose a consumer loan

When you need to make a big purchase and you don't have enough savings, a consumer loan can be a logical solution to the problem. We tell you where you can get it and how to draw up a contract so that over time it does not turn into a problem.

Consumer credit is money you borrow from a bank to buy goods and services for yourself or your family. A consumer loan is issued only to individuals, it cannot be issued to a company.

In addition, there are consumer loans. They can be taken from  microfinance organizations (MFIs), consumer credit cooperatives and  pawnshops . In fact, this is the same as a loan, but the terms of the loan can be very different from the terms of the loan.

What are the types of consumer loans?

They can be divided according to several criteria:

By purpose

A consumer loan can be taken both for a specific purchase - targeted, and without specifying upcoming expenses. For example, if you apply for a POS loan in a furniture or electronics store, the bank transfers the money directly to the seller. This is a targeted loan. If you take out a loan or a loan and do not report what you spent it on, it is considered inappropriate. For targeted loans, rates may be lower, especially if it is an affiliate program of a store and a bank.

To ensure

When you take out a loan for a large amount, the bank usually needs additional guarantees that you will return it. A loan is often secured by collateral, such as a car or other property, or a surety from others. If the thing is pledged to the bank, you can continue to use it, but you cannot sell or give it away. In addition, the bank may ask you to insure it. On the other hand, the interest on secured loans is usually lower than on unsecured ones.

By deadline

The term division of loans and loans is usually very different. For MFIs, a short-term loan is considered to be up to 30 days (“payday”), and for banks, short-term loans are up to a year. The term greatly affects the interest on loans and loans. Usually, the longer the term, the lower the rate. But not always - you need to study the conditions of a particular organization.

What do you need to do to get a loan?

Each bank, MFI or other organization sets its own rules. For example, to get a loan at a pawnshop, it is enough to show your passport and leave something valuable as collateral. For a consumer loan at an MFI, you usually only need a passport, it can even be issued online . And the bank, before giving you a loan, especially for a large amount, can set much more conditions. But there are a few general requirements

Provide documents

There are only two mandatory documents: a passport of a citizen of the Russian Federation with a registration mark (or other identification document) and an application for a loan.

When applying for a POS loan, consultants often ask to see a second document with a photo, for example, rights. This is necessary so that fraudsters cannot get loans and borrowings using other people's documents.

“I needed a loan for a large amount, but I had open delinquencies on other loans. On the Internet, I found a company that helps to get a loan in one of several banks for a commission of 3-5%. I filled out an application. The broker called back, introducing himself as Ilya. He offered to make documents ... "

Be vigilant, do not step on other people's rakes!

Banks may require a certificate of income or other documents confirming your financial solvency. A complete list of documents can be found on the lender's website or at its office.

Report your income

You don't always need to document your salary, pension, or stipend, but you usually need to report income. This determines the maximum loan amount. The higher your income, the more credit you can repay.

If you have guarantors, you are ready to pledge property or insure in favor of the bank, then the amount of the loan or loan may be even greater. After all, the bank in this case is less risky.

Get insurance

Often in loan agreements there is a clause that obliges you to insure the collateral, your life or health. You are not required by law to do so, but insurance will help mitigate possible credit risks, such as keeping your mortgaged property if you suddenly lose your job and cannot pay your loan. With such insurance, the bank can offer you more favorable terms in terms of loan size, term or interest rate.

If a bank offers a loan with simultaneous life and health insurance, then it is obliged to offer an alternative loan option without insurance, but on terms comparable in terms of amount and repayment period. You can refuse to buy insurance, but then the conditions for the loan will change.