What is a consumer loan?

A consumer loan is characterized as a loan specifically made for personal, family, or household purposes. This definition captures the essence of what consumer loans typically involve, which is the provision of funds for individual borrowing needs such as purchasing a vehicle, financing education, or covering other necessary expenses that are not directly related to business investments or real estate.

Consumer loans are generally issued to individuals rather than businesses, focusing on the personal financial needs of consumers. This type of loan can come in various forms, such as personal loans, credit cards, or installment loans, all intended to assist with everyday life expenses. The distinct purpose of consumer loans helps differentiate them from loans aimed at business usage or property transactions.