At the beginning of the new year, the competition in the bank consumer loan market has escalated, and many banks have launched large-value consumer loan products as high as one million and as low as 3%, which has attracted the attention of many consumers. These products seem to be discounted, but in fact, there are many restrictions and conditions, and not everyone can easily apply and enjoy. So, what is the truth about bank consumer loans? Are these products meant to help consumers or for profit? This article will expose the inside story and risks of bank consumer loans from the following aspects.
Definition of Bank Consumer Loan: What is Consumer Loan? What are the types? Bank consumer loans refer to loans issued by banks to individuals to meet the daily consumption expenses of individuals or families, such as the purchase of automobiles, home appliances, tourism, education, medical care, etc. The characteristics of bank consumer loans are that the purpose of the loan is clear, the loan amount is generally low, the loan term is generally short, the loan interest rate is generally high, and the repayment method is generally equal principal and interest or equal principal.
The main types of bank consumer loans are as follows:
Credit consumer loans: refers to consumer loans directly issued by banks to individuals according to their credit status without requiring collateral or guarantors, such as credit card installments, credit card loans, pure credit loans, etc. The advantages of credit consumer loans are that the application procedures are simple, the approval speed is fast, the loan is flexible, and the amount is high. The disadvantages of credit consumer loans are that the interest rate is higher, the repayment pressure is high, and the overdue risk is high.
Mortgage consumer loan: refers to the consumer loan issued to individuals by banks requiring them to provide valuable assets such as real estate, automobiles, and other valuable assets as collateral, such as house mortgages, car mortgages, mortgages, etc. The advantages of a mortgage consumer loan are that the interest rate is lower, the term is longer, and the repayment pressure is low. The disadvantages of mortgage consumer loans are that the application procedures are complicated, the approval speed is slow, the loan is not flexible, the amount is limited, and the collateral is risky.
Guaranteed consumer loans: refers to consumer loans issued to individuals by banks that require individuals to provide units or individuals with certain economic strength and credit as guarantors, such as provident fund loans, student loans, and rural household loans. The advantages of secured consumer loans are that the interest rate is moderate, the term is moderate, and the repayment pressure is moderate. The disadvantages of guaranteed consumer loans are that the application procedures are cumbersome, the approval speed is average, the loan is not very flexible, the amount is limited, and the guarantor is responsible.
Background of Bank Consumer Loans: Why do banks launch large-value consumer loans? What are the motivations and purposes? The background of bank consumer loan is a financial product and service launched by banks in the current economic and financial environment, in order to respond to market changes and competition, to achieve their own development and profits, and to serve the needs and policies of the society. The motives and purposes of bank consumer loans are mainly as follows:
Responding to market changes: In recent years, with the strengthening of the country's regulation and supervision of the real estate market, the mortgage business of banks has been affected to a certain extent, with the reduction of mortgage amounts, the increase of mortgage interest rates, and the decline of mortgage income. At the same time, with the country's regulation and rectification of Internet finance, the deposit business of banks has also been affected to a certain extent, with the cost of deposits increasing and the income of deposits decreasing. In order to make up for the gap in the mortgage and deposit business, banks have turned to the relatively empty field of consumer loans, trying to open up new markets and customers, and increase their own revenues and profits.
Responding to market competition: In recent years, with the development and innovation of financial technology, banks' consumer loan business has also faced competition and challenges from various parties, such as Internet platforms, small loan companies, consumer finance companies, etc. These non-bank institutions, by virtue of their own technological advantages, data advantages, channel advantages, cost advantages, etc., provide consumers with more convenient, flexible and diverse consumer loan products and services, and seize a certain market share and customer group. In order to cope with these competitors, banks have to increase investment and innovation in consumer lending business to improve their competitiveness and attractiveness.
Serving social needs: In recent years, with the development and progress of society, consumers' consumption concepts and consumption needs have also undergone some changes and transformations. On the one hand, consumers pay more attention to personal development and freedom, pursue the quality of life and happiness more, and have a more rational and prudent attitude towards consumption. On the other hand, consumers are more autonomous and flexible, no longer rely on and trust intermediaries, but more use and master Internet technology, publish and view information by themselves, contact and communicate with buyers and sellers, and complete transactions and payments by themselves. Therefore, consumers' demand for consumer loans is also more diversified and individualized, not only to meet the basic living consumption, such as the purchase of cars, home appliances, tourism, education, medical care, etc., but also to meet some special living expenses, such as the purchase of real estate, decoration, wedding, pension, etc.
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