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Consumer Credit: An Overview
Consumer credit plays a vital role in modern economies by enabling individuals to access goods and services without paying the full cost upfront. It allows consumers to borrow money or defer payment, making everyday purchases, large expenses, and unexpected costs more manageable. From credit cards to personal loans, consumer credit supports financial flexibility and purchasing power for households.
At its core, consumer credit involves a lender providing funds or extending payment terms to a borrower under agreed conditions. These conditions typically include the loan amount, interest rate, repayment schedule, and any associated fees. Lenders assess a borrower’s creditworthiness—often based on income, credit history, and existing obligations—before approving credit. This process helps balance access to financing with responsible risk management.