Consumer Finance

CONSUMER FINANCE OR CONSUMER CREDIT

and is liquidated piecemeal or in successive fractions under a plan agreed upon at the time of transfer. ‡ In other words consumer credit includes all asset based financing plans offered to primarily individuals to acquire durable consumer goods.CONSUMER FINANCE ‡ The term consumer credit (finance) refers to a transfer of wealth. the payment of which is deferred in whole or in part. to future. .

FEATURES OF CONSUMER CREDIT ‡ PARTIES TO TRANSACTION ‡ BIPARTITE AGREEMENT Borrower/consumer/customer and dealer cum financer ‡ TRIPARTITE AGREEMENT . financer and customer .Dealer.

the customer cannot terminate the agreement before the payment of full price ) ‡ Instalment payment system .STRUCTURE OF TRANSACTION ‡ Hire purchase ‡ Conditional sale (The ownership is not transferred till total purchase price is paid.

The deposit may vary between 15-25 % of the amount financed at a compound rate of interest. ‡ Some arrangements also provide zero deposit scheme with higher equated monthly instalment EMI.The down payment may range between 20 -25 % of the cost ‡ DEPOSIT PAYMENT SCHEME . .MODE OF PAYMENT ‡ DOWN PAYMENT SCHEMES .

PAYMENT PERIOD AND RATE OF INTEREST ‡ Typically the repayment period ranges from 12 to 60 months .

‡ The consumer cannot sell/pledge/hypothecate the asset. .SECURITY ‡ The security is generally in the form of a charge on the asset.

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