Consumer lending, also called retail lending, refers loans that allow consumers to purchase consumables, thus negating business loans, commercial loans, and also mortgage loans.
Consumer lending is a service that is provided by banks and other financial institutions. The consumer loans offered to consumers can come in the form of secured and unsecured loans, usually depending on the amount to be borrowed and type of product to be bought.
For example, it is very common to get a secure loan for car loans. On the other hand, the use of credit cards, which is one of the most common types of consumer loans nowadays, is an unsecured loan.
Consumer lending is a very competitive business, which can be a great advantage to a person with good credit scores. People with good credit scores will have at their disposal a good array of loan products; shopping around for the best interest rates and loan terms is possible. Note though that people with low credit scores will definitely not enjoy the same number of choices. Furthermore, even with a good credit score, any late payment or breach of loan agreements holds the threat of lowered credit scores reduced access to consumer lending products.
As mentioned earlier, credit cards are one of the most accessible types of consumer lending products. However, with this convenience comes the price of high interest rates and penalties, which often leads to consumer debt.