A consumer loan is a loan given to consumers to finance specific types of expenditures. In other words, a consumer loan is any type of loan made to a consumer by a creditor. The loan can be secured (backed by the assets of the borrower) or unsecured (not backed by the assets of the borrower).
A longer-term loan with low-interest rates simply put.
The interest rate
The terms of the loan
Any fees or penalties associated with the loan
The lender’s reputation and customer service
Open-ended or close-ended loan
Type of Loan
loans that are backed by collateral (assets that are used to cover the loan in the event that the borrower defaults). Secured loans generally grant the borrower greater amounts of financing, a longer repayment period, and a lower charged interest rate. As the loan is backed by assets, the risk faced by the lender is reduced. For example, in the event that the borrower defaults, the lender would be able to take possession of collateralized assets and liquidate them to repay the outstanding amount.
loans that are not backed by collateral. Unsecured loans generally grant the borrower a limited amount of financing, a shorter repayment period, and a higher charged interest rate. As the loan is not backed by assets, the lender faces increased risk. For example, in the case of borrower default, the lender may not be able to recover the outstanding loan amount.