How to Get a Consumer Loan

We explored the details of obtaining a loan together with experts.

What Is a Consumer Loan?

A consumer loan is money you can borrow from a bank under agreed terms and spend at your discretion. Exceptions include targeted loans:

• Mortgage: for buying an apartment, a private house, or construction purposes.
• Car loan: funds can only be used to purchase a vehicle, which will remain collateral with the bank until the debt is fully repaid.
• Refinancing: the bank provides money exclusively to repay other loans.

Types of Consumer Loans

To allow borrowers to take money on suitable terms, banks offer different types of loans:

• Targeted: issued for a specific purpose, e.g., a car loan or installment purchase in a store. Usually, the bank transfers the money directly to the seller, and the borrower receives the product and a payment schedule.
• Non-targeted: funds can be used for any purpose without bank approval.
• Short-term: loans for less than 12 months.
• Long-term: loans for more than 12 months.

Consumer Loan Application Process

The process usually consists of three stages:

1. Preparing Documents

The required documents may vary by bank but generally include:

• Loan application;
• Passport with registration mark;
• If registration is temporary — a document confirming place of stay;
• Income statement.

For salary clients of a bank, minimal documentation may be sufficient — sometimes just a passport is enough.

2. Loan Application Review

After submitting the application, the bank verifies documents, credit history, and the borrower’s solvency. The response time depends on the bank: usually within three to five days, sometimes faster.

3. Signing the Agreement

If approved, the borrower signs a contract specifying all terms: loan amount, interest rate, term, payment schedule, repayment procedure, and penalties for late payment. If the loan requires collateral or a co-signer/guarantor, a separate collateral or guarantee agreement is also signed.

Factors Affecting Consumer Loan Approval

Each bank has its own credit policy, but most consider:

• Credit history: the presence or absence of late payments, bankruptcy, or court cases (e.g., alimony). Improving credit history can increase approval chances.
• Debt load: the percentage of monthly income spent on loan payments.
• Registration: whether the borrower has permanent or temporary registration.
• Solvency: official employment and income sufficient to cover payments; work experience is also checked.
• Loan purpose: unsecured consumer loans may have stricter conditions compared to loans for real estate or vehicles due to lack of collateral.
• Collateral: some loans require it, such as car loans or mortgages. Collateral can increase approval chances and reduce interest rates.