Consumer lending describes the industry for financing to individuals. It is different than loans awarded to businesses, which is generally referred to as commercial lending.
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Consumer loans include several types of consumer products including mortgage loans, auto loans, personal loans, credit cards, lines of credit and other niche consumer-targeted loan products. Many consumer-loan products are not secured by property or assets.
Rates and Terms
Consumer-loan rates and terms vary by product. However, the amount of credit, interest rate and financing terms are affected by the credit rating of the applicant or applicants. Good credit nets lower financing costs, and bad credit may limit your consumer-loan options and the associated costs.
As of August 2010, consumer loans have become more heavily regulated. The 1968 Consumer Protection Credit Act addressed requirements of lenders, including the "truth in lending" law, whereby creditors most disclose important loan terms in a disclosure statement.