Prepared by:

Sankaliya Harikrushna (61) patel Binita(62) Fin: B Group no: 31

Guided by :
prof. Pinakin jaiswal

Meaning
The term Consumer credit refers the activities

involved in granting credit to consumer to enable them to possess/ own goods meant for every day use Also known by several names: Credit merchandising/ deferred payment/ installment buying /hire purchase/ pay- out- of income scheme/ easy payment/ credit buying/ installment credit plan, etc

Definition
the term consumer credit refers to a transfer of

wealth, the payment of which is deferred in whole part, to future, and is liquidated piecemeal or in successive fractions under a plan agreed upon at the time of transfer.

Advantages of credit
Current use of goods and services.
Permits purchase even when fund are low. A cushion for financial emergencies.

Advance notice of sales.

Easier to return merchandise. Convenient when shopping. One monthly payment. Safer than cash.

Advantages of credit
Needed for hotel , reservations and shopping online.
To take advantage of float time/grace period. Indicates financial stabilty.

Disadvantages of consumer credit

Temptation of overspend
Can create long term financial problems, slow

progress toward financial goals. Potential loss of merchandise due to late or non payment. Ties up future income. Credit cost money more costly than paying with cash

Sources of Consumer Finance

Traders
Commercial Banks Cash Credit Institutions

NBFCs
Other sources

 Traders Includes sales finance companies, hire purchase & and

other financial institutions Commercial Banks: provides direct or indirect finance the consumer durables Banks lend large sum of money at wholesale rate to commercial or sales finance companies, and other such intermediaries Personal loans are also granted without security Credit Card Institutions: Arranges credit purchase facility for consumer articles through respective banks which issue credit card Enables to buy g & s on credit

 NBFCs: Also know as small loan companies or licensed

lenders or personal finance companies. Charges substantially high rate of interest than market rates Last resort to consumers Other Sources: Savings and Loan Associations Mutual savings Bank

 SBI 9.75%
Central bank of India 10.50% LIC hosing 10.25%

Department credit bank 11.25%

General provident fund 8.8%

STATUS OF CONSUMER CREDIT IN INDIA

1. Housing Loans- Housing loans are primarily taken for the sake of financing building of new houses, purchase of new houses, purchase of old houses or for repairing an existing house. 2. Personal Loans - Personal Loans can be claimed for absolutely any purpose. 3. Consumer Durable Loans- Consumer durable loans can be claimed for the purchase of consumer durables such as televisions, music systems, refrigerators, etc. 4. Vehicle Loans- Vehicle loans, as the name suggests can be claimed for the purchase of vehicles.

5. Educational Loans- Educational loans can be claimed for the purpose of either undergraduate or postgraduate education in either India or abroad. 6. Credit cards 7. Travel Loans- Travel loans can be claimed as the name suggests for the purpose of meeting travel expenditures

Types of credit Closed-end credit

Closed-end credit is used for a specific purpose, for a

specific amount, and for a specific period of time. Payments are usually of equal amounts. Mortgage loans and automobile loans are examples of closedend credit. An agreement, or contract, lists the repayment terms, such as the number of payments, the payment amount, and how much the credit will cost. Generally, with closed-end credit, the seller retains some form of control over the ownership (title) to the goods until all payments have been completed. For example, a car company will have a "lien" on the car until the car loan is paid in full

Open-end credit
With open-end, or revolving credit, loans are made on

a continuous basis as you purchase items, and you are billed periodically to make at least partial payment. Using a credit card issued by a store, a bank card such as VISA or MasterCard, or overdraft protection are examples of open-end credit. There is a maximum amount of credit that you can use, called your line of credit. Unless you pay off the debt in full each month, you will often have to pay a high-rate of interest or other kinds of finance charges for the use of credit