The key factor contributing to the growth and increase of a Country’s economic development is the finance obtained from the consumer’s purchases. In countries like Nigeria, the finance obtained by the sale of household products contributes the largest share to its country’s economy. There are various consumer loan benefits. Initially it eases liquidity restrictions and secondly maintains consumption among the masses. These benefits in turn correspond to enhanced outputs and create various job opportunities. These consumer loans help people with low and little credit history to improve on their financial status, thereby earning an affordable and a decent credit history for themselves. It also improves the standard of living of the people and promotes businesses of various retailers.
Consumer loans – benefits:
- These loans permit consumers to purchase goods and products without having the necessity to pay for them immediately.
- Consumer loans make it compulsory for the consumers to save money simultaneously and thus help them to use their income well.
- They provide the most convenient ways to the people to purchase goods which are durable and long lasting.
- These loans will be of great help to tackle unexpected expenses at times of medical emergencies, accidents and unfortunate deaths.
- It also allows people to purchase goods and products which are above their means to improve the standards of their living.
- The most important advantage of consumer loans is the financial flexibility it offers. It allows them to break down large costs and help them pay these sums at monthly or other periodical installments.
- Consumers are always provided with substantial rewards in returns for maintaining good credit scores. The rewards include cash back offers and additional credit points.
For the retailers
- Consumer loans attract a lot of consumers and thus increase business.
- They alleviate sale of goods at an increased rate, which would have been left untouched due to the low credit scores of consumers. Therefore the retailers experience increased benefits and profits.
For the economy
- Improves investments on the industrial developments, thereby increasing income for the consumers and job opportunities.
- Improves entrepreneurship.
- On increasing investments, job offers and national income, consumer loans on the whole, promote national economy and improve standards of development.
Consumer loans – drawbacks:
It is also equally essential to make yourself aware of the drawbacks of consumer loans as well.
- Consumer loans promote goods and sometimes compel consumers to buy products which they don’t really need and wish.
- These loans also make people allocate a part of their future income to get benefited currently and to improve credit scores. It turns out to be a great difficulty to the consumers who think the proportion allocated is too high or when situations go wrong and the salaries of them become low.
- The consumers will be charged high rates of interest monthly, in addition to meeting huge expenditures for their business.
- It might lead to potential insolvency and make people pay high prices for credits.