Last Updated 16 Jun 2020

Consumer credit and leverage

Category Bank, Credit, Money
Essay type Research
Words 368 (1 page)
Views 184

Consumer Credit and leverage

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Dear Sally,

It is very nice to hear from you, regarding your question about the consumer credit and leverage; I will try my best to explain to you in short detail. Credit as you know is a system, in which money is borrowed and then returned within a stipulated period of time with, supplementary added to it. ‘Consumer credit’, is based on the same lines, the only thing here is credit is given to consumers on the lines of finance agreements, credit cards, store credits and also loans which can be of short term or long time nature and can be based on collateral or non collateral basis.

There are pros and cons of the system of consumer credit, the major pros are that, like in the case of credit card, that even though if you cant afford something and you desperately want it, you can always swipe the credit card, get your things and pay later or for instance, if there is something of very high value, you can go in for a STPL (short term personal loan), which you can pay in timely installments. The only disadvantage that comes for these kinds of consumer credits is when repayment of the credit is not done, due to lack of funds, or due to agreement failures, also another disadvantage of consumer credit is that, these easy credits which you will get through financial institutions, cards, and shops, if not used wisely, then there is huge chance of having a huge debt and in the end it would lead to bankruptcy.

Leverage the term has many facets, and basically consumer leverage is associated with the amount of spending power that you as a consumer will receive, with lots of credit cards and loans at your dispense, so it is actually the power and control enjoyed by a consumer, this kind of leverage however is very important as it boosts the economy, as the common citizen, has got a huge spending capacity, which in turn would boost the sales of companies, who would eventually end up paying good taxes. Hope I have satisfied your queries, anxiously awaiting your mail.




3) Ralph Brubaker,  consumer credit and bankruptcy, a new paradigm,


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