In general, consumer loan is defined as a contract between a lender, namely a bank or a credit institution, with a borrower. It allows the latter to have a sum of money equal to or greater than € 200 and less than or equal to € 75,000 (depending on the institution) which must be reimbursed in installments within a defined period of time, which may vary. from several months to several years. The total cost of each consumer loan depends in particular on the interest rate that is fixed and the duration of repayment of the credit.
The consumer loan application is accessible, subject to acceptance by the lender, to all individuals on the condition that it is taken out to meet non-professional needs. What needs are we typically talking about, you ask? They can take the form of financing consumer goods (car, household appliances, furniture, etc.) or services (travel, work, studies, etc.). On the other hand, the purchase of real estate cannot be affected by this type of loan, like the operations excluded from the scope of consumer credit provided for in article L312-4 of the Consumer Code. .
To apply for a consumer loan (or several since they can be combined), the borrower can contact a bank or a credit institution directly or go through a consumer credit broker. If his request is accepted, he receives the amount granted in a single payment.
The two main types of consumer loans
There are two main types of consumer loan: earmarked consumer loans, which means that the loan is used exclusively to finance a contract relating to the supply of particular goods or the provision of particular services (1) , and loans consumption unallocated, which the borrower can spend as he sees fit. And in detail, what does it give?
As its name suggests, the allocated credit must finance a specific project, fixed in the credit offer . In other words, this type of consumer loan cannot exist without a specific good or service to finance. In this case, the borrower begins to repay his loan from the delivery of the good or the service concerned. In general, it is the financing of a new vehicle (auto-motorcycle loan) or work carried out by professionals (work loans) that are most often at the origin of this type of loan. Note that, in the event that the good is not delivered or defective or in the event that the service is not provided, the borrower has nothing to reimburse. Sale and credit can be canceled.
For its part, the unaffected consumer loan allows the borrower to use the amount of credit granted as he wishes, without having to justify himself to the lender . This is a more flexible option that allows great flexibility in spending. But, in this case, nothing allows the borrower to escape repayment, even in the event of non-receipt of the service or the good financed. There are two types of unallocated consumer loans:
the personal loan , which takes the form of an amount paid and to be used freely;
revolving credit, also called permanent credit, which takes the form of a credit opening which, with or without the use of a credit card, offers its beneficiary the possibility of disposing in a fractional way, on the dates of his choice, the amount of credit granted
The other types of loan to know
Even if they are less known, there are other financing solutions that are part of consumer loans. For example, rental with option to purchase (LOA) , also called financial lease or leasing, allows you to have an asset defined at the time of signing the contract by paying monthly rent and gives you the possibility of leasing it. ” buy at the end of the contract or return it to the owner establishment. This type of financing is used in particular for financing cars, boats or high-tech equipment.
For its part, the student loan guaranteed by the State , the amount of which depends on the bank granting the credit, is intended to finance studies. It allows the borrower to pay school fees but also his accommodation, his daily expenses, his computer equipment, his car or a trip abroad.
Finally, personal micro credit , granted to people excluded from the traditional banking system and whose ceiling cannot exceed 5,000 €, allows individuals to integrate into society or work. That is to say ? Concretely, this loan can be used for the repair or purchase of a vehicle or to finance a driver’s license, vocational training or poorly reimbursed health care. more info to visit: http://liveblogcenter.com/