Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 1LO
Summary Introduction
To discuss: The consumer loan and its different types.
Expert Solution & Answer
Explanation of Solution
There is a loan that is taken by people to buy the really costly products and they cannot buy those products from their normal income and this type of loan is considered as a consumer loan. This loan is taken to accomplish a long-lasting goal such as funding education fees, purchasing products, or some non-durable products such as funding expensive vacations. Consumer loans have a formal process and also considered as a contract with negotiation under which the borrowing terms and the schedule of the repayment are specified.
Major types of consumer loans
- Auto loans: This type of loan is taken for vehicles such as financing of SUV, car, truck, etc. With this type of loan, approx.80% of the cost of a vehicle can be financed. It is a type of secured loan as collateral is given against the loan.
- Loans for durable goods: This type of loan is taken to finance some costly products such as TV, computer, mobile, etc. The maturity of this loan depends on the type of product purchased from the loan.
- Consolidation loans: This type of loan is taken to repay another credit. This type of loan helps in handling an unhealthy credit situation of a person.
- Education loans: A consumer loan is also taken for the funding of education. This type of loan can be taken by the students as well as parents of the students.
Other types of consumer loans based on repayment of the loan
- Single-payment loans: In this type of loan, the principal and interest amount is paid after a certain period as a lump-sum amount. This type of loan is taken by people to avoid installment based loans.
- Installment loans: In this type of loan, the amount is paid in a series in which a fixed amount is paid on the predetermined dates instead of paying the lump-sum amount.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Explain what important information we can get from each sources of credit information to be able to make a decision whether or not we can extend credit to the loan applicant
Discuss the key components of a good written loan policy
Explain whati mportant information we can get from each sources of credit information to be able to make a decision whether or not we can extend credit to the loan applicant.
Chapter 7 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- What are the primary tools, and how are they used by lenders when determining whether they will lend money to you? PLEASE CITE REFERENCESarrow_forwardWhat type of loan/s these banks offer? Explain how they use this type of loan among their clients.arrow_forwardWhy is it essential to know different kinds of loans?arrow_forward
- Write some of the examples of commercial loans?arrow_forwardIf a consumer with a relatively low credit score applied for a loan from your bank, what other criteria might you consider before deciding to grant a loan?arrow_forwardBefore taking out a consumer loan, you should be sure the purchase is compatible with your financial plans and budget. Discuss the loan features you would take into consideration when shopping for credit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
What is Banking as a Service? | 11:FS Explores; Author: 11:FS;https://www.youtube.com/watch?v=BvSX6a-P75k;License: Standard Youtube License