We often hear the term consumer credit but do we really know what it means? Does it really have any importance in my daily life? Well, the answer to the second question is yes. But first, let’s address the first question.
Consumer credit is the debt that is taken by individuals where the proceeds are used immediately. The funds of a Singapore personal loan or credit line is used to buy goods and services that you may need right now but may not have enough cash to pay for it. Unlike business loan Singapore and mortgage loans, the money being borrowed is used for investment or property purchase that is not intended for immediate use or consumption. The main idea of a consumer credit is having the capacity to buy the goods and services for use today and paying for it in the future.
Now one of the biggest questions we may have if we are an individual or a small business is that, does consumer credit affect us. As mentioned above, the answer is yes in a direct or indirect way. If you are a market analyst, a financial institution or even a small business enterprise, consumer credit has a direct impact on you. Measuring consumer credit can tell you how the market is doing and how it will be operating in the short term future.
When consumer credit is high and consumers purchase goods and services through payday loans and credit which are paid in the next few weeks, this tells us that the economy is doing well. When the economy is doing well, it means your business will grow as there are consumers who buy in cash and consumers who buy in credit that support the market spending.
On the other hand, if you are an individual who is the one applying for a car loan in Singapore and got car refinancing for your car purchase, consumer credit is indirectly affecting you. Your concern as an individual consumer is on getting your loan and credit paid. But when the market is doing well, you have opportunities to earn and become more open to more income. The effect to an individual consumer is very minimal and barely noticeable. This is why we should continue to focus on getting our loans paid and our outstanding credit to a minimum.