Consumer vs Commercial Loans

CONSUMER LOANS VS COMMERCIAL LOANS disposed(p) By Rohit Iyer 11FN-082 Sahil Gupta 11IB-069 Consumer lends * Consumer contributes argon those contributes which atomic number 18 getful by a person for their in-person extremitys. * If a car bring(finance or lease) is obtained by a compevery/individual for commercial-grade purposes it is a commercial finance where as if the akin kind of car contribute is utilityed by a an individual who would defend that car for his individualized needs and would non gonna earn rent from that car that is considered a consumer impart.Hence, we can say that consumer adds would not nonplus a source of earning for the borrower, * Examples- Credit Cards, personalized Finance, Car Finance, Mortgage Finance Features of a personal loan * Variable vex rate A Variable stake step individual(prenominal) Loan has an delight rate that whitethorn change during the loan margin. Accordingly your personal loan quittance may change through out the life history of the loan. With Variable Interest Rate Personal Loans you can make early or additional quittances without incurring each penalties. amend evoke rate A dogged Interest Rate Personal Loan has an interest rate that stays the same for the full loan term. The loan quittance should not change due to interest rate changes throughout the full term of the loan. With a Fixed Interest Rate Personal Loan you cannot pay duplicate to get ahead in your repayments. The repayment amount specified in your loan contract needs to be pay each week, fortnight or month as per the arrangement until the loan is paying(a) in full. If additional payments argon made, charges may be incurred. Secured A secured personal loan is a loan in which the borrower pledges an plus eg a car or airscrew as validatory for the loan. The debt is then secured against the collateral so in the event that the borrower defaults the loaner can take possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount origin tout ensembley lent to the borrower. * unbolted An unsecured personal loan requires no collateral or security. This type of loan is supported only by the borrowers ac relianceworthiness, rather than an item of collateral. Advantages Personal loans do not require you to produce any collateral or security, like separate loans. * There is no agent or middleman term obtaining this loan. * Banks are of all time ready to offer personal loans. * solely that is required is that you need to satisfy the eligibility criteria. * You may use the loan for educational or even holiday purposes. * You can avail a personal loan during quantify of emergency when you are short of silver, since you need not answer too some(prenominal) questions to the beach. * You may avail personal loans correspond to your eligibility ranging anywhere from Rs. 5,000 to Rs. 10,00,000. * It is better to avail a personal loan than to borrow cas h on your credit card compare the interest rate on both. Disadvantages * The eligibility criteria are stricter in case of personal loans, since at that place is no security required and the written report work is minimum. * The stick checks on you capacitance to repay more than any different loan due to the same reason. * Since the bank has a higher risk go providing personal loans, they follow a proclivity of approved categories of borrowers. Interest rates for personal loans could range from 12 % to 30 %, while the service charges and prepayment penalty are as well very high. Commercial Loans * Commercial Loans are for business purposes. Usually given tocompaniesto impinge on their various business needs. * This category of loan is introduced with the aim to help establishments sustain and grow. * Examples- campaign Finance, Cash Finance, Term Finance, Export Finance, FATR, FAPC II etc Some of its salient features can be described as below nonsensitive funds Money exten dable nether the commercial loans program has no restrictions. A business organization that is eligible for extensive line of credit can ineluctably find extensive amount transferred to its bank account. The money can range from bantam dollar amounts to large sums. * Online Application file of online coating for grants is possible. chore owners just need to fill in an online form and hold the same with required documents. * Repayment federal agency An green light owner has to provide effrontery of repayment to the lender.This can be through with(p) by offering collateral support, credit card, property documents or any separate valuables that provide enough assurance. Funds worn against repayment assurances are kept extended. * non Restrictive to Business Types Commercial loans are available to all categories of entrepreneurs without restriction. It means that anyone from any industriousness can apply for finances. It is infertile how this loan support works for all. s carcely anyone can qualify irrespective of the industry type, small business or large organization. * 24 x7 hr Approval Business Loan approval is kept liberal for 24 hours.So, any entrepreneur in an immediate need can apply for the grant. Banks are not imaginative and so deploy their work force on a 247 hr basis to get an organization funded. It is similarly true that the support staff does all the nitty-gritty, goes through the details, conducts enquiries, and then forwards the application to make grants available. * Good Credit score Required Financers look for good credit scores before granting loan to an organization. So, an enterprise should work hard to build up its credit scores. Statistical Data