Lending limit fixation of consumer credit in aksum town by correlation analysis

“Consumer credit” the word brought drastic changes in money lending world. Financial institutions were enticed people with attractive policies and offers. The covetousness of financial institutions for high interest rates could not consider the exact lending limit in consumer credit. Finally, consumers were failed to repay their unlimited borrowed money. Only individual's income level, wealth conditions, mortgaged values, and loan repayment capacities are fully not sufficient to provide credit to consumers. We should consider saving potentiality of the particular society either town or city and also recognize income generating opportunities of the people in the society, saving feasibilities of the people and saving culture etc. are important for deciding the credit limit to consumer. Financial institutions week strategies and estimations witnessed in the past decade by showing huge financial crises. “Speed thrills but kills” this caption also apt to the financial institutions because all over the world had bitter taste by issuing unlimited consumer loans to the people. In case of consumer credit, the fervent problem of financial institutions how to fix the lending limit and how much amount lends exactly to the individuals. In this paper researcher basic objective, fix the lending limit by correlation coefficient with the help of normal curve and considered primary components, income levels and saving potentiality of the people in the Aksum town. To achieve this objective, researcher collected primary information from 160 respondents by choosing stratified technique in qualitative data method. And secondary information collected through books, magazines, articles and internet sources.