Consumer credit is a type of credit offered by both banks and private creditors. This means that you have the option to apply for a consumer credit at your or any other branch of the bank, as well as the possibility of drawing up consumer credit via the Internet with a private creditor. Consumer credit is one of the types of credit, but it differs, for example, from quick loans and credit lines, with the potential credit being higher than other credits, and the repayment term is usually longer. This type of credit is usually drawn up if you need to borrow a larger amount to make a larger purchase, or to pay for a more expensive service. Often, the loan interest rate is also lower when drawing up consumer credit than it would for a quick loan. Consumer credit also has flexible repayment terms and cheap interest payments than other types of credit.
Why choose a consumer credit?
If you are in a situation where you need to borrow, it is important to evaluate the different types of credit available. There are many different and different bank and non-bank creditors available on the Latvian market today. These creditors offer different types of credit on different terms. Choosing the right credit that would be most appropriate in a given situation can be difficult. That is why Thomas Bigger.lv has gathered information on what exactly is a consumer credit, how it differs from other types of credit and what one should remember before drawing up a consumer credit.
Borrow more money
It is possible to borrow more money than, for example, sms credit when drawing up a consumer credit. This, of course, does not mean that we recommend borrowing more money than you need, but there are situations where you need to borrow a sum of more than a few hundred euros. Depending on the creditor, it is possible to draw up a consumer loan of up to several thousand euros, but it is important to carefully consider the amount of the required amount and borrow as much as necessary to meet the specific objective. It is important to borrow no more and no less than necessary. If you borrow a smaller amount than necessary, it means that the difference will have to be paid by the pocket itself, which may unnecessarily delay the purchase or settlement process. At the same time, borrowing a much larger amount than you need is irresponsible, because you will have to repay the loan sooner or later, and the interest on the loan and the borrowing can be expensively disbursed at a later date, giving up the loan.
Repay the loan gradually
It is possible to repay the consumer credit gradually. Other short-term or quick loans are usually repaid in one installment, but repayment terms for consumer credit are usually 3 months. Most consumer credit is issued for 24 months, but in some cases it is possible to repay the loan even up to 60 months. Loan repayment terms depend on the terms of each individual creditor or bank and on the terms you agree with the creditor prior to signing the credit agreement. When choosing to take a consumer loan, along with the creditor, it is important to evaluate the terms of the loan repayment – in a long time you can repay the loan and which loan repayment schedule is best for you.
When repaying a consumer loan, you can choose the repayment schedule that suits you best. The most popular repayment schedules for consumer credit are the declining and equal payout schedule.
Types of loan repayment
Depending on the repayment schedule, you will have to pay a higher amount of money when you start repaying the loan, but this amount will be less when you reach the end of the refund period. When choosing a descending repayment schedule, it should be taken into account that the repayment amount will be variable and will be affected by the loan interest rate and its distribution based on the principal amount of the loan. At the beginning of the repayment period, you will pay more for interest and less when you approach the repayment term.
Equal payment schedule is the most advantageous for people who want the same loan repayment amount each month. The payment schedule for equal payments is based on the principal amount of the loan and the interest on the loan, which are distributed equally throughout the loan repayment period. This repayment schedule is beneficial if you want to automate the credit repayment process through your internet bank and so your monthly payments will be made automatically and there will be no risk of forgetting to make credit payments. Just remember that automatic payments are only possible if your bank account has enough funds to make these automatic payments.
Consumer credit without collateral
No collateral or guarantors are required to draw up consumer credit. This means that you will not have to worry about finding guarantors or mortgaging your movable or immovable property, instead of simply showing your income. Making a consumer loan is usually much easier than leasing or mortgage. Despite the fact that it is possible to draw up a consumer loan for relatively large sums of money, it is much easier to do so than other loans for larger amounts.
Who uses consumer credit?
In most cases, you will not have to report to a bank or private creditor when you draw up a consumer loan, and you need to borrow the specific amount and how you plan to use it. Even if the creditor wants to know what the amount is for, if it is not provided for in the contract, no penalty can be imposed if the credit is not used for the specified purposes. This, of course, does not mean that the credit should be taken without reason and simply used to make daily payments. There are many reasons for taking a consumer credit, but the most popular reasons why people choose to sign up for consumer credit are:
Payment for training or courses
The desire to learn and invest in your future is welcome. Self-improvement and the acquisition of new talent can open up many new career paths. Paid courses or training is not a pleasure, but investing in your future is an important investment if you want to achieve new goals. If you are unable to afford to finance studies or courses on your own, then this credit can be the best solution for your situation. It is possible to draw up a consumer loan of up to several thousand euros, then it will be enough to finance at least the first part of the tuition fee. New courses are devel- oping a person’s qualifications that will help to get the best job in the future and make a better salary. That is why, if you are in a situation where you do not know whether your current education and qualifications can provide you with the career you are dreaming of, then it is worth considering investing in your future and expanding your horizons. Read also: Study Credit .
Housing remodeled or upgraded
One of the most popular reasons why people choose to sign up for consumer credit is the need for home improvement or improvement. This credit allows you to focus more on the issues of apartment design, materials, color and shape choice, rather than money-worrying and potential funds shortages. Consumer credit can also be used to attract masters and workers, which can greatly facilitate the repair process. If you want to improve the visual condition of your place of residence or are forced to carry out emergency repairs, this credit can be the best solution.
Before you can make a loan, you have to consider how much money you need to make these home improvements. Consult a knowledgeable repairer to evaluate how much of your planned repairs will cost to know how much a consumer loan will be needed for home repairs or home improvement.
When you have assessed the cost of improvement and repair, Thomas Bigger.lv will help you find the most suitable consumer loan for your home repair. Read also: Credit for furniture purchase .
Each of us may not expect to be in a situation where sudden health care is needed. Consumer credit can help you pay for unforeseen costs associated with healthcare. You may have to pay for unexpected hospital or medical expenses, rehabilitation, or some other type of therapy. Private or unexpected healthcare can be very expensive, but it is important not to postpone it and take care of yourself or your loved ones. This credit is undoubtedly a good way to relieve your health concerns. If you are considering consumer credit to afford the necessary health care, then let Thomas Bigger.v help you choose the best consumer credit with the most favorable terms. With Thomas Bigger.lv you can make it easier for you to choose your credit and compare the various creditors available in the Latvian market to make the best decision. Carefully assess the amount of loan you need, choose the most appropriate creditor, and no longer put your own or your nearest health care.
Purchase of household appliances
We all use different types of household appliances everyday to ease our daily lives. Fortunately, good home appliances can serve us for years, but if you suddenly need to buy a new home appliance, it can mean big and unexpected expenses. That’s why people often draw up consumer loans to cover these unexpected household appliances. Evaluate how much you need for these purchases and consider your ability to repay that amount. Once you have assessed how big a loan and how long you need, with Thomas Bigger.lv you can compare available consumer credits to find the credit that seems to you the most appropriate for your prosperity and opportunities.
Buying a car
If you are deciding to buy a new car but do not want to make a lease, then perhaps consumer credit is the best option for you. Whether a consumer credit is best for your needs depends on how much you pay for the car and how much money you have to invest in buying the car. If you want to buy a brand new car, then leasing will probably be the best solution, but if you want to buy a used car then buying with a consumer credit can be the best solution.
When you have chosen the car you want to buy and understand the amount you need to borrow, Thomas Bigger.lv helps you to compare consumer credit.
Conditions for drawing up consumer credit
Just like any other credit, consumer credit is an important decision that should be taken seriously before borrowing. If you have evaluated all the options and decided that consumer credit is the best solution, then you have to remember that in order to get a loan you have to meet the queue condition. The processing of a consumer credit is similar to any other credit. Conditions may vary between different creditors, but the main guidelines will be the same:
- The person must be of legal age
You must be at least 18 years old to get a consumer credit. Most creditors do not want to give consumer loans to people under the age of 20, but the minimum age to receive any type of credit in Latvia is 18 years old. 18-year-olds have reached the legal age of majority and are eligible for credits, but their choices are more limited. If a person can prove that he has a stable monthly income then the credit should not be a problem.
Credit institutions are often reluctant to lend money to individuals aged 18-19, as previous experience shows that creditors have been forced to find that people in this age group are often still studying and have no regular income, resulting in young people borrowing irresponsibly and being unable to return the credits they receive . At the same time, it is worth noting that the possibilities to borrow are not necessarily excluded, but may have to apply to several creditors.
- Good credit history
Just like any other type of credit to get a consumer credit, it is important that a person has a good credit history. If you have a damaged credit history and you have been in the so-called debtor list, then it may happen that the creditor will reject the consumer credit application based on the risk factor that the problem of repayment of the loan may occur again. The debtors register comes to people who have encountered various types of problems in meeting their credit obligations. These can be delayed payments or complete avoidance of credit obligations.
Each private creditor evaluates each application individually, but your chances of getting a consumer credit on favorable terms are higher if you have a good credit history. Even though there have been problems with credit obligations in the past, the possibility of obtaining a consumer credit is not excluded, but credit terms may not be as good as those with a positive credit history.
- Credit amount
If you have decided to take a consumer credit, then you have to evaluate the amount of credit, for the purposes for which you need this amount. It is important to borrow the right amount, assess whether the selected amount of money covers the intended expenses, and it is not too high. Carefully evaluate the amount of credit you need and whether you can repay it.
The maximum credit amount is usually calculated based on the borrower’s financial situation. The amount of credit available is usually influenced by the borrower’s income. Upon receipt of the loan application, the creditor will assess the borrower’s solvency from the information the borrower will submit with the loan application form.
Who should pay particular attention to when drawing up consumer credit?
Consumer credit can be drawn up both at banks and non-bank creditors. Before taking a loan, consider where to borrow best. Banks often offer their customers credit on more favorable terms than private creditors. Choosing consumer credits makes it possible to evaluate several offers before making a decision. To help you make the best decision to find the most advantageous consumer credit, Thomas Bigger.lv has compiled the most important points to look for when choosing the most favorable consumer credit.
The credit requirement should always be carefully assessed before the credit commitment begins. Evaluating whether a consumer credit is the best type of credit for your needs and whether the purchase of particular goods and services is urgent. Evaluate how urgent your needs are. If you decide that the loan will be the best solution, consider how much you will need.
When borrowing any type of credit, it is important to assess the need for the loan and the ability to repay the loan on time. Borrow responsibly!
Amount of the loan amount
When you decide on a good credit, carefully assess the amount of money you need to cover the planned expenses. Consider what your options are for giving this money back in time and whether it is possible to do so without having to worry about it.
Upon receipt of your credit application form, the particular credit institution will assess the amount of credit you have requested. Exiting will assess your solvency, but it is important to personally assess your financial capabilities before engaging in credit commitments.
Opportunities to repay loans / monthly payments
When choosing to take a consumer credit, it is very important to assess your ability to repay the loan. The amount of the selected loan and the amount of monthly payments must be evaluated. To receive a consumer credit approval from a selected creditor, monthly loan payments should be within the range of 20-40% of a person’s monthly income. When making a consumer loan, remember to choose monthly loan payments that will be friendly to your monthly budget in the long run. It is important to make these monthly payments to a realistic amount that will not affect your daily finances excessively negatively.
Additional credit costs
When considering consumer credit, it is worth remembering that there are extra costs for drawing up a loan. The processing and issuing of a consumer credit agreement is in most cases a paid service. Banks often offer their customers a consumer credit free of charge, but if you choose to make a consumer loan to one of the non-bank creditors, you will have to reckon with additional costs for the credit. The approximate cost of drawing up a consumer credit is usually 1.5-3% of the loan amount.
The GPL, or the annual interest rate, is the amount that the borrower will have to pay in addition to the amount of money borrowed by the person. The annual interest rate is particularly important for loans with a maturity of at least one year. The lower the APR, the better the credit to the borrower. GPL is calculated from the total amount of the loan and a special formula is used to calculate it. Factors affecting the GPL calculation process are all the borrower’s obligations. In addition to the APR, other charges, such as account maintenance and maintenance costs, are usually applied. All these expenses must be documented in the credit agreement. Remember to carefully read all of the contract points and pay special attention to any additional payments.
It is important to remember that creditors can use one of two ways of calculating interest – simple or compound interest. Before you sign a credit agreement, you should calculate both simple and compound interest to understand which option is more profitable.
Everyone can experience unexpected situations that affect a person’s financial situation. That is why it is important to familiarize yourself with the conditions and penalties that can be imposed if credit payments are delayed before the credit is drawn up. Before drawing up a loan, it is worthwhile to find out how flexible the chosen creditor is in cases where it is necessary to extend the loan repayment term and to take into account that the conditions vary depending on the chosen creditor, as well as the costs related to the extension of the loan repayment term.
Of course, it should be noted that credit clearance, knowing that there will be problems in repaying this credit, is a very irresponsible act and should not be done.
Before signing any type of contract, it is very important to familiarize yourself with all the terms and conditions of the contract. If you do not know any of the contract points, then it is very important to ask the lender about it. By signing a contract, you must have a clear understanding of all the obligations contained in the contract. You also need to be aware of the specific, contractual obligations of your party.
It is worth remembering when choosing consumer credit
Remember that even if you have drawn up a consumer loan and received a consumer credit amount on your bank account, you have the right to cancel this credit within 14 days. If you have not started to spend the money you have received, you have the full right to exercise the right of withdrawal and to waive these credit obligations.
If the borrower is able to repay the loan earlier than the agreed loan repayment term, the borrower has the right to repay the consumer loan at no additional cost earlier than the agreed term. If you are in a situation where you are financially capable of repaying consumer credit sooner than agreed in the contract, this is the most financially responsible step. Accelerating credit is a way to save money on credit interest payments. If you have a consumer loan that you are able to repay sooner – definitely contact your credit institution, develop a new loan repayment schedule and settle your credit obligations faster and cheaper!