In some situations, you may need to use a bank loan to finance a purchase that your cash flow cannot cover and to make money. This is what a consumer loan is for. We show you everything you need to know about this type of financing.
A consumer credit is a loan granted by a bank or a credit institution to consumers to cover specific types of expenses (purchase of a car, carrying out work, financing a trip or studies, etc.) . Each establishment freely sets the rate of its consumer credit. It can therefore be difficult to choose the right loan, it is advisable to compare several offers before choosing.
Special features of consumer credit
The majority, if not all of the financial establishments today offer one or more types of consumer credit . In order to protect consumers, the law regulates the marketing of this type of product. To allow consumers to know the terms of its engagement , the distributor must therefore provide them with a certain amount of information. A consumer credit offer must mention:
- The nature of the credit;
- The duration of the loan;
- The APR (overall effective annual rate) of the loan;
- The total amount that can be borrowed;
- Payment methods (the number of installments and their amount).
What are the different types of consumer credit?
There are different types of consumer credit. Each type has its own conditions and particularities.
- Personal loan: allows the borrower to use the borrowed capital as he sees fit and without having to justify his allocation;
- The affected credit: unlike the personal loan, here the loan is assigned for the purchase of a property defined at the establishment of the contract (purchase of a car, purchase of a sofa, etc.);
- Revolving credit: formerly called “revolving credit”, this loan gives you access to a capital determined at the signing of the contract, you can use the money as many times as you want until you have reached the maximum amount authorized. You can also use only part. Note that only the money used must be reimbursed.
- Rental with option to buy.
- Free credit.
How much can I borrow, for how long?
A loan is part of a consumer credit when its total amount is less than 75,000 dollars. It must also be granted for a minimum period of 3 months. The revolving credit is granted for a period of one year, but if the borrower wishes, he can renew it every year. For other types of consumer credit – the State does not impose a maximum repayment period – but generally, the repayment does not exceed 84 months (7 years).
Can you get consumer credit from an online bank?
As with traditional banks, you can apply for consumer credit from an online bank. Note that not all establishments offer it. If you have subscribed to a current account with an online bank, find out if it offers consumer credit. Otherwise, use a credit simulator to find out all the institutions that market it.
How to simulate your consumer credit?
A credit simulation is done online via a dedicated platform for this purpose. It is strongly advised to carry out a simulation online before taking out a consumer loan. This will help you to familiarize yourself with the conditions for obtaining it.
The simulator will tell you for example the amount of monthly payments, the duration of the loan as well as the rate applied. These factors are essential when you want to take out consumer credit . Finally, be sure to compare the interest rate applied by the different organizations.
Can you buy back your consumer credit (get rid of a credit)
The repurchase of credit makes it possible to gather in a single credit various debts. Instead of the borrower having several payments to make every month, the consolidation will allow him to have only one schedule to repay each month.
The repurchase of credit does not take into account the duration nor the interest rates of the old debts. The new establishment which carried out the repurchase will define a new rate as well as a new duration of the loan. The amount of each monthly payment and its interest rate are often lowered while the repayment period is lengthened. All types of credit can be redeemed. You can without any problem redeem your consumer credits.