The Entire Term of the Loan


When it comes to financing a consumer good such as a television, a smartphone or even a new kitchen with a bank loan, this form of loan is usually referred to as consumer credit . This is a classic installment loan granted by a lending bank exclusively to private individuals for the free use of the lent loan. A consumer credit is granted with fixed, monthly consistently high rates at an interest rate determined over the entire term of the loan. An exceptional form of consumer credit, however, is the car loan or car loan, which is tied to the purchase of a motor vehicle or motorcycle with regard to the use of the loan amount. Moreover, in this form of consumer credit, the purchased motor vehicle is used as collateral by the lending bank.

Consumer credit and its advantages and disadvantages

Like any other type of credit, consumer credit has both advantages and disadvantages, which are shown below:

Benefits of consumer credit

  • 1.) Planability

    Compared to a credit line, which is often used as a consumer loan, the “real” consumer loan is very well planable with regard to its basic conditions and credit conditions. Upon conclusion of a credit agreement, monthly installment amount, term and interest conditions are agreed in writing between the credit parties. This forms the basis of a very good planability of the loan.


  • 2) Blank loan

    Consumer loans or consumer loans are usually given as so-called blanket loans. That is, the lending bank has no interest in the borrower’s intended use of the loan amount.


  • 3.) Comparability

Thus, consumer loans are basically classic installment loans with fixed credit conditions and credit features such as maturity, debit interest and APR, so they are also comparable with other banks’ credit offers or by using one of the numerous credit calculators on the Internet.

Disadvantages of a consumer loan

  • 1.) SCHUFA score or credit score

    Every loan taken out regularly at a bank is reported to the SCHUFA. Only the acceptance of the loan is reported, but not credit details such as loan amount, term, etc. So if you have multiple consumer – or consumer loans running in parallel, thus risking a deterioration of his credit score. This can mean that you are rejected for further loan requests or at least significantly worse conditions.


  • 2.) terms and minimum loan amounts

Not necessarily a disadvantage, but nevertheless to be considered in some situations: Consumer loans usually have a minimum term of 12 months and a minimum loan amount of € 1,000. Those who need less credit to finance a consumer good and who are able to repay the borrowed loan amount in less than 12 months should look for a loan in the form of a short-term mini loan of a maximum of 6 months.

Conclusion on consumer credit

Conclusion on consumer credit

If a consumer loan is to be used to finance a desired good, it is above all to look more closely at the numerous offers in the market by means of a credit comparison and thus to find the loan offer that best suits your own needs. For a short-term need for a small loan / mini-credit can serve as consumer finance.

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