Consumer credit is either an unallocated credit or a credit allocated to the purchase of a good or service, but their operations remain rather close. The consumer loan guide guides you for your project.
Consumer credit: definition
The consumption credit is a credit granted to an individual by a bank or credit institution. Also called conso credit, it can finance everything you want (excluding real estate). It has been for some years strictly regulated by the law in order to limit any abuse (Lagarde law then Hamon law among others). Its amount is between 200 € and 75 000 € with a minimum duration of 3 months. Several loans for consumption can be cumulated, it is not necessary however that the totality of the monthly installments of credit of the borrower (immo and conso) is greater than 33% of its incomes to protect it from the over-indebtedness.
Consumer credit has two distinct categories:
- The credits allocated for the purchase of a specific property
- Unrestricted credits for free use of the borrowed amount
Which consumer credit to choose?
The choice of your consumption credit must be made according to your project. It depends on the amount to be borrowed, the desired duration or simply the type of project.
Credit consumption affected
The appropriated appropriation is intended for the financing of a good or a service indicated in the contract. The assigned loan has the particularity of being entirely dependent on the property to be financed and conversely, one can not exist without the other. It is nevertheless important to indicate on the sales contract that it is conditioned to obtain the credit in order to avoid any problem.
When the borrower takes out an assigned credit, he gets a guarantee with this one:
-If the good or service is failing or not delivered the borrower does not have to start repaying the loan, the sale and credit can be canceled.
-If the credit is refused, the borrower is not required to honor the promise to purchase and therefore does not find himself with a good on the arms that he can not pay.
The credit affected has the disadvantage of being attached to a service or property but the advantage of obtaining credit and good or neither.
- Motorcycle loan
The auto-moto loan is the most widespread affected credit. Often representing a large budget for households, the use of a credit for the purchase of a vehicle is very common. It allows the borrower who does not have savings or who does not want to use it, to start repaying his credit when he is delivered from his vehicle.
- Ready works
The credit works can be assigned or unassigned, it is very often affected when the borrower uses professionals and for consequent work.
Non-earmarked consumption credit
The unallocated credit allows the borrower to use the borrowed amount as he or she wishes. This is a very flexible financing solution since it does not require any justification for the destination of the funds. The obtaining of the credit and the purchase of the good or service are thus here completely independent. This independence has the advantage of freedom but the main disadvantage is that in case of dispute with the seller and non-delivery of the property for example you are required to repay your credit under the terms of the contract. In addition, if you do not get your financing and you have already signed a purchase order you will be unable to pay the property if you do not have savings aside.
- Revolving credit
The revolving credit is a type of unrestricted credit, since it consists of a reserve of money made available to the borrower, which he can use as he wishes and when he wishes it in one or more times.
- Personal loan
The personal credit can group different appellations under its name. This is a non-earmarked credit but can sometimes be called a wedding credit or travel credit so as to talk more to the consumer, but the amount of money can be used by the borrower as he or she does. wish it. It can therefore be financing of property, service or cash or other things (excluding real estate).
Consumer credit: how does it work?
Consumer credit is characterized by:
- Amounts between € 200 and € 75,000
- Duration of 3 months minimum to a few years
- A little binding
Like any credit, the consumer credit is a contract between a lending institution and a borrower, where the first agrees to lend a set amount of money and the second agrees to repay.
Consumer credit includes:
- A sum borrowed: capital
- APR (the annual percentage rate of charge) which is the rate to be used for any comparison
- Duration, amount and number of monthly payments
- Guarantees and any insurance
- The total cost of credit
Conso credit is governed by the Consumer Code and provides the borrower with a right of withdrawal of 14 calendar days.