49. Consumer finance as a division of retail banking: credit cards as a kind of loans.

A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual's credit rating. Credit cards have higher interest rates (around 19% per year) than most consumer loans or lines of credit. Almost every store allows for payment of goods and services through credit cards. Because of their wide spread acceptance, credit cards are one of the most popular forms of payment for consumer goods and services in the U.S.

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.

In the USA credit card is the popular form of loan, so banks use many reasons to give out a credit card.

Credit cards aren't just useful for borrowing - they also come with other benefits:

1. Cash back. If you pay off your bill in full every month, a cash back credit card will pay you a proportion of your spending, either as a cash payment or knocked off your bill once a year.

2. Rewards. Although similar to cash back credit cards, reward credit cards pay you points or vouchers for every pound you spend.

3. Money off. Some retailer- or airline-branded credit cards offer discounts, for example on flights or in in-store cafes.

50. Consumer finance as a division of retail banking: mortgage loans.

Many people cannot afford to pay the entire purchase price for real property at the time that they purchase it. Therefore, lenders agree to lay out the money for the purchaser to use to pay the purchase price. In exchange, the buyer agrees to pay back the loan and agrees that the purchased property itself will be collateral for the loan. If the loan is not paid back, the lender will have the right to repossess the purchased property. This is called a mortgage. The lender (almost always a bank) is called the “mortgagee.” The borrower (the buyer of the property) is called the “mortgagor.” If a mortgagee actually does repossess the mortgaged property, that is called a “foreclosure.” For example: Note that not all mortgage loans are for the money that is used to buy the property. Sometimes, a person will need money to go on vacation or buy a car or send a kid to college and his or her house will be the only collateral that a bank will accept. In this case, the borrower can still mortgage his or her house. A mortgage loan that is actually used to buy the house (as in the above case) is known as a “purchase money mortgage.” Mortgage Theory Different jurisdictions take different views as to whether a mortgagee is considered to actually have title to the mortgaged property or merely a “lien” on the mortgaged property. This is of little practical significance. The one area in which this does make a difference is whether mortgaging property breaks up a joint tenancy. Recall that if one joint tenant transfers his or her interest in the joint tenancy, the joint tenancy is severed. In a jurisdiction that subscribes to the “title” theory of mortgages, one joint tenant mortgaging his or her interest would break up the tenancy because it would be considered a transfer in title. However, in a “lien” theory jurisdiction, one joint tenant mortgaging his or her interest would not break up the joint tenancy. A mortgage is an interest in real estate. As such, the granting of a mortgage (from the buyer to the bank, in most cases) needs to be in writing to be enforceable under the Statute of Frauds. However, in some circumstances, courts will infer an “equitable mortgage,” where there is no writing. The most common scenario in which an equitable mortgage will be inferred is where the buyer gives the deed to the lender with the intent that the lender hold the deed as collateral. Despite the lack of a writing, courts will infer that the parties meant the arrangement to be a mortgage. For example: As we discussed earlier, once a mortgage is properly executed, then both parties have an interest in the land. The mortgagor (the homeowner) holds the right to possess and own the property. The mortgagee (the bank) holds a lien on the property and the right to recover the property if the loan is defaulted on. Both of these interests are fully transferable to third parties. Of course, each third party can only take whatever interest the transferor had in the property. Transferring of mortgage interests occur very often when banks, who are interested in making loans and collecting interest, are not interested in harassing creditors and bringing foreclosure actions. In such a case, the Bank might sell its mortgage interest to a collection agency which will then continue to collect the mortgagor’s debt and, if necessary, bring a foreclosure action against the mortgagor. For example:

51.Consumer finance as a division of retail banking: auto loans.

Retail banks execute transactions directly with consumers, rather than corporations or other banks. The term is generally used to distinguish these banking services from investment banking, commercial banking or wholesale banking.

Services offered include savings and transactional accounts, mortgages, personal loans, debit and credit cards, CDs, safe deposit boxes etc. Auto loans are provided by banks as well.

Nowadays many people are looking to get a new or used vehicle. But with the price of vehicles these days, most people need a loan to buy one.

Typically, seven of 10 buyers finance their vehicles through a dealer, working with third-party lenders and automobile manufacturers. Consumers can submit a loan application with financial institutions, but purchase the car from a dealership.

An auto loan preapproval means that customers will have to fill out a loan application, giving financial information and a description of the type of vehicle wanted, with an estimate of how much it will cost. The financial institution will check the customers’ credit ratings and ability to repay that amount. Interest rates on auto loans fluctuate depending on a couple of factors with customer’s credit rating (history playing a huge part in that). A customer with a perfect credit rating can qualify for a lower %. Interest rate will also fluctuate depending on the term of car loan. Customers may be asked to put a down payment on the vehicle. It is also important to know that the bank will put a lien on the car so it can't be sold until the loan is paid, and the car title is hold until that time as well.

Some analysts indicate that the recent economic crisis has reduced the number of people shopping for cars such that auto sales fell to their lowest level in 17 years. So auto loans are significantly influenced by economic conditions and general environment.

The demand for auto loans have been declining over the last few years in Ukraine, but at the same time credit offers have increased. Top – 10 banks – leaders in the auto loans in Ukraine are Universal Bank, VTB Bank, UniCreditBank, Credit Agricole, Delta Bank and others.

Many banks and car dealerships offer auto loans under the scheme "Trade in". It means the customer trades his old vehicle to buy another, and the bank is paying the balance.

Traditionally, when somebody takes out an auto loan, the car itself serves as collateral for the loan. That's why, if the customer were to stop making payments on the loan, the lender would repossess the car. The loan gives the lender a "lien," or claim, on the title. And the car that has a lien on it can’t be sold. So the client has first to get the lien removed, by paying off the loan.