Our lives and most of what we own are paid for with borrowed money so that in the future we can enjoy things from time to time in small pieces. So our world is messed up and even the German state is financed by money that we borrow as a nation. So there is nothing wrong with taking out loans for housing, cars, consumption and more. The world works like this and it is these many different types of credit that enable us to live well and do many things we dream of.
What is a consumer loan?
A consumer loan or consumer loan is one of the most popular and most widespread forms of credit in Germany. As the name suggests, it is a loan that you normally use for consumption. So a loan that you take out to finance your consumption, including paying an unexpected bill, a deposit for an apartment, or maybe a new TV for the living room.
Consumption covers many things, and the same goes for the simple consumer loans that we review on this page. It is a broad term for everything that we as consumers use in our daily lives. It is therefore a very versatile type of loan because it can be used for so many different things.
Conversely, a car loan, for example, aims to pay for a new or used car on credit. Consumer loans, on the other hand, are very versatile and can be used for a whole range of different things.
A consumer credit can be used for:
- To cover normal household consumption (everyday costs)
- A consumer loan can also be used as a car loan
- Unexpected bills and expenses that suddenly appear
- Travel and Vacation – Seeing vacation as consumption and borrowing money makes it possible to experience the world
- Electronics and other consumer goods
- Investments in stocks or currencies
- Combine smaller loans into a consumer loan to save money on interest
So it is a very flexible and widespread loan that can cover many different things that you need in everyday life and for which you lack money. It is therefore not surprising that this is one of the most popular forms of credit that Germans take up.
What is the difference between a cash loan and a consumer loan?
One of the most frequently asked questions about different loans is the difference between a money loan and a consumer loan. It is a good question and it is often difficult for potential customers to find out what the difference really is.
You can find the explanation here so that you can easily find out which loan is best for you and your financial situation.
The boundaries between a cash loan and a consumer or consumer loan are fairly fluid and difficult to define. Both types can be used to finance consumption and daily consumption and therefore there are many misunderstandings.
The most common features that distinguish the two types of loan are
- Capital (loan amount) – Cash advances are often referred to as small loans. The amount is usually between 500 and 2,000 dollars. For less than 500 dollars we are talking about the so-called quick loans and over 2,000 dollars you can usually find installment loans.
- Interest Rate – A consumer loan has a lower interest rate than a cash loan or a quick loan, with the exception of free quick loans.
- Term – When you take out a new consumer loan, it usually has a slightly longer term than the other types of credit mentioned. A consumer loan with repayment over several years is often divided into low monthly installments, which is only possible due to the longer repayment period.
- Annual Percentage Costs – Percentage annual costs are a good comparison indicator and provide information about the total annual loan costs for a given loan offer. Consumer loans are usually lower than cash loans.
- Approval – When applying for one of the major consumer loans, the approval process and credit check of your application is in many cases more thorough than with a small loan or other types.