Within all the areas that cover finance , there are contracts that allow financing certain purchases when the necessary liquidity is not available. It is what is known as consumer loans .
In consumer loans, a consumer (for example, a company) asks a lender (for example, a bank) an amount of money to make specific purchases. Under this loan is the consumer’s commitment to repay the loan plus a series of interests. In this way, both parties win:
- The consumer immediately gets an amount of money at the time he needs it.
- The lender obtains in the medium or long term an additional amount to the one he lent.
However, consumer loans can manifest themselves in different ways. Let’s see the three most relevant.
Consumer loans: what types exist?
Within what we understand by consumer loans as explained above, these can take three main forms:
- Loans They are the credits themselves. That is, those contracts for which the lender recovers the money he has left to the consumer, but also some additional interests. For this, an expiration date is established, that is, a specific moment in which the consumer must have fulfilled his part of the agreement.
- Deferred payments. When the consumer returns to the lender what he obtained from him, formulas can be established that allow flexibility in payments. Deferred payments are precisely one of these formulas and establish regular periods of time in which the consumer must return a specific part of the proceeds.
- Credit openings In this case, it is the lender who must follow specified and agreed terms in advance. However, in the same way as in the previous cases, the consumer must return to the lender what was obtained by the signed contract in addition to interest.
That is, nobody gives anything away and if someone requests a loan they will have to assume that the repayment they make will have certain interests. That is why both banks and any other type of lender request guarantees: to keep their backs in the event that the consumer does not fulfill his part of the contract.
Consumer loans: an alternative
One of the issues that we must always keep in mind when talking about finances is that money circulates and that what is used to pay something determined is not what was originally deposited for that purpose. A simple example: if you enter money into your bank account, the bank will use that money to perform its own operations and when you withdraw it, in the future, that money will no longer be the same as what you entered.
Alternatives to consumer loans that allow money to circulate without paying interest
Let’s look at an example by applying it to a crowdfunding campaign , one of the most widely used forms of financing in many sectors today:
- A company launches a crowdfunding campaign to finance a product. If the minimum financing is reached, you agree to deliver the final product to your patrons within one year.
- The campaign reaches that minimum financing and the company collects the amount collected.
- Before producing the financed product, whose production time is estimated in half a year, he uses that money to buy a machinery that, in six months, will allow him to recover the investment plus a series of bonuses.
- After those six months and with the money already recovered, the company allocates the initial amount of money to produce what is financed by the crowdfunding campaign after having raised more economic capital thanks to the purchased machinery.