Consumer Credit

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Related to Consumer Credit: commercial credit, investment credit

Consumer Credit


credit granted to the population for purchasing consumer goods or services.

In capitalist nations, consumer credit is granted by commercial enterprises (in the form of deferring payment by the buyer for the purchase) and banks and other credit and financial institutions. The commercial enterprises that provide credit directly to purchasers then turn to the banks for credit. Thus banks are the basic creditors in the area of consumer credit. For instance, around 60 percent of the total consumer credit debt in the United States at the end of the 1960’s, counting direct and indirect crediting, was held by the commercial banks. As a rule, loans are granted for up to three years. The bank makes the loans at a rate of 10–12 percent per annum and often even more. This rate is a heavy burden on the consumers and creates colossal profits for the monopolistic banks.

Consumer credit in the capitalist nations, particularly in the United States, has steadily increased. At the end of 1970, the total debt of US consumers was $124 billion. Around 14 percent of the after-tax personal income of the US population is spent each year to retire consumer loans. The accelerated growth of consumer credit is related to the limited effective demand of the population and to chronic difficulties in selling goods under the conditions of modern capitalism.

Under socialism, consumer credit is provided to the population by the state, cooperative, and trade organizations for pur-chasing personal consumer products (such as refrigerators, television sets, radios, motorcycles, sewing machines, photo-graphic equipment, timepieces, rugs, and woolen and silk textiles). From 1961 to 1971 in the USSR, the volume of credit sales to the public in state and cooperative trade rose almost 3.4 times and in 1971 was around 3.8 billion rubles. Varieties of consumer credit include pawnshop credit and credit through mutual aid funds. In buying goods on credit, the purchaser puts up 20–25 percent of the price in cash. Depending upon the type of goods, the balance is paid over six to 12 months in equal installments. For certain goods, the repayment is extended up to two years. Interest for the credit is 1–2 percent per annum. Being a form of organizing earned income savings, consumer credit in a socialist society is aimed at providing the fullest satisfaction of the needs of the working people.


References in periodicals archive ?
Unilateral changes of the total cost of the consumer credit shall be permitted when the credit contract provides for the increase and the reduction of the total cost of the loan, the circumstances applicable to the changes in the total cost of the loan are described in the contract, and are objectively motivated and do not depend on the will of the creditor.
Mizuho Bank had reportedly provided loans to criminals through its affiliation with consumer credit partner Orient Corp.
According the Board of Governors' November release, consumer credit grew 0.
The Mitsubishi UFJ group is intent on buttressing the profitability of its consumer credit operations on the strength of the envisioned consolidation, the sources said.
Dominic Offord, insolvency expert at Browne Jacobson, said it represented the biggest overhaul of consumer credit legislation since 1974.
Despite its spectacular role in fueling twentieth century prosperity, consumer credit had an uphill battle in winning approval from many traditionally oriented social workers, economists, clergy, and newspaper editors, as well as old-line bankers and retailers.
The downside with the Consumer Credit Counseling Service is that a note appears on the consumer's credit report saying that the individual is undergoing the service.
Jim Eyraud, Vice President of Wilshire Consumer Credit says, "We are proud to offer our support to the Westside Food Bank and commend them for their hard work and service to the community.
We should bear in mind that swings in growth of consumer credit are wider than fluctuations in the economy as a whole because consumer credit is used most heavily to finance purchases of durable goods, which are much more cyclical than consumer income or total consumption.
The most recent consumer credit data support the findings of the January Senior Loan Officer Opinion Survey conducted by the Federal Reserve.
We selected Fair Isaac's Model Builder because it is the best tool to help us expand our consumer credit portfolio while still controlling and monitoring risk," said Corrado Giannasca, deputy general manager for Credit and Risk at Linea S.

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