Consumer Credit (West's Encyclopedia of American Law)
Short-term loans made to enable people to purchase goods or services primarily for personal, family, or household purposes.
Consumer credit transactions can be classified into several different classes.
Installment credit involves credit that is repaid by the borrower in several periodic payments; loans repaid in one lump sum are classified as noninstallment credit. Installment credit has expanded in popularity, with an increasing number of consumers buying goods on credit in order to spread repayment of the purchase price and the interest owed on the principal borrowed over an extended time.
Originator and Holder
The originator of credit is the person or company who originally extended the credit, while the holder is the individual or business who obtained the debt at a discounted price in order to collect payments at a subsequent time. Auto dealers are credit originators at the time a consumer purchases an auto on credit, but many loans are subsequently assigned by them to banks or sales finance companies, which become credit holders.
Commercial banks buy many consumer installment loans from car dealers and department stores and also participate in all aspects of consumer credit transactions both as originators and holders. The portion of the consumer credit market attributable to...
(The entire section is 2714 words.)
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