Final answer:
Credit used by consumers for personal purchases is called consumer credit. It allows the purchase of goods and services without immediate payment and includes forms such as credit cards and automobile loans. However, it's important to manage consumer credit responsibly as it results in debt.
Step-by-step explanation:
Credit used by consumers for personal purchases is called consumer credit. This term encompasses various types of credit facilities consumers use to make purchases, including credit cards, installment loans, and personal lines of credit. When people refer to consumer credit, they are often talking about transactions that enable the purchase of goods and services without the need to pay upfront, given that the agreement includes repayment over time, often with interest.
For instance, when buying a vehicle, which is a significant financial decision, many consumers opt for an automobile loan, which is a form of consumer credit. This loan allows buyers to repay the cost of the vehicle over a set period. Another common form of consumer credit is the use of credit cards, which are considered short-term loans that need repayment typically within a month's time. It is important to remember that although consumer credit offers the convenience of buying items without immediate payment, it does lead to debt, which requires responsible management.