Characteristics of consumer loan system of a commercial bank?

Answer 1

Many a times it happens that the banks pay a huge amount of attention to the businesses to gain heavy profits. They thrive in the loans and services provided to these business. Their services can range from providing funds for the new and start up business to expansion of a well set up empire. These services can also include the management of the transaction related to inner-city as well as international areas which requires a huge sum of finances.

Apart from providing finances, these banks also provide advices related to finance to the various companies and other needy firms in the market. It doesn't matter what all transactions and dealing the banks get involved in, they never forget their individual customers. These consumers are the whole sole of these banks as it is the consumers only who cover a large business area for these banks. consumer loans are the most important source of funds to the banks and thus it is important for a bank to keep such loans on the priority level.

As the time is passing by, the number of individuals seeking loans from the banks is increasing day by day. The demands and needs of the consumers are increasing at a higher rate and so more and more consumers are opting for loans to satisfy their needs. They seek loans for each and every need and the banks are advantaging this fact. Doesn't matter what the requirements are whether they want to gain loan for a small scale business or want financial aid for houses construction or even if they want a brand new vehicle, they knock the door of these banks to solve each and every purpose and hence are falling under debt day by day.

Consumer loans fall under different characteristics and sizes which can rang form long time huge mortgage loans to small level mortgage loans. These small scale loans can be taken even for shopping with the help of credit cards. These credit cards are made available by the banks to allure the consumers that all their financial needs can be fulfilled anytime regardless of the place and in disguise of help they are making huge profits with the help of these credit cards.

Such loans vary from business loan is many ways. However the business loans are also borrowed by the individuals at general level but people tend to think in other way when they go for business loan. They always have different opinion towards business loans and their opinion suddenly changes with personal loans. If we check the records we would come to know that the chances of failing the repayment time are higher in consumer loans as compared to the business loans. Hence such types of loans are more risky than the business loans. This is the reason why the rate of interest is always high when you opt for such loans for consumers. Also it happens that there is no criterion of flexible interest rates when we talk of loans for the consumers. Such loans generally fall i n three categories which are credit cards, auto or home loans and instalments as well as non-instalment loans.