Consumer credit: The different types of credit
Consumer credit concerns loans not related to the acquisition of real estate. There are different types, the rules of which are the same:
- Amount between 200 and 75 000 $;
- Duration of the additional loan at 3 months;
- Period of reflection and possibility of withdrawal within 14 calendar days.
Depending on the following types of credits, it is possible to contact a bank or specialized financial institutions.
Personal credit: For loans without a specific reason
The credit or personal loan consists of the allocation of a sum of money without it being necessary to justify a project or a purchase. This credit does not require proof of purchase and the borrower can use it as he wishes.
This type of credit is particularly used to finance current expenses or leisure, such as travel. It can also make it possible to fill a bank overdraft so that the expenses incurred are less important.
The personal loan must generally be repaid over a short period not exceeding 5 years.
Its rate generally varies from 4.5 to 9% depending on the case.
What is the credit allocated?
Unlike personal credit, the credit allocated is used to finance a particular project (new or used vehicle, furniture, etc.). The borrower must provide proof of purchase to prove that the loan is only used to finance the acquisition.
The assigned credit provides guarantees to the borrower; being inseparable from the act of purchase, the credit is automatically canceled when the sale is not compliant, or canceled. In addition, an acceptance of the affected credit does not commit the borrower to finalize his purchase.
Its rate generally varies from 4.5 to 9%. More info on our dedicated page here!
What is free credit?
The free credit is a credit for which the interest rate and the administration fees are zero. The amount reimbursed is therefore exactly the same as the amount borrowed.
This credit is contracted at the point of sale. To be feasible, the seller must sell a product at the best price, and must guarantee that it has not been subject to a price increase within 30 days before the purchase. The seller is then bound to respect the price at which the free credit was concluded. He can not increase it once the credit has been accepted and signed.
This credit is particularly recognizable by the words “10 times without fees” or “Pay 3 times” at the point of sale.
Revolving or revolving credit
Revolving credit consists of a sum of money available at any time, in one or more times. The amount available is calculated based on the needs and solvency of the borrower.
The sum made available can be spent by credit card, by choosing the option “payment on credit”.
This credit does not concern the purchase of a particular good or service, it is particularly used for everyday expenses. The borrower uses the sum lent as he wishes, without being obliged to spend it in his entirety.
As part of a revolving credit, the lender must re-check the financial position of the borrower every 3 years.
The repayment term depends on the amount borrowed:
- 36 months for a loan less than or equal to 3 000 $
- 60 months for a loan over $ 3,000
This credit is usually contracted at the point of sale. Because of its flexible nature, its rate is particularly high; it varies from 14 to 22%.
Student credit: Useful to finance your studies
The student loan is granted by a financial institution for the purpose of financing the borrower’s studies (tuition, food, lodging, etc.). The latter only begins to repay the monthly payments once his studies have been completed, and does not have to pay any fees.
To benefit from it, you must be under 28 years old and be registered as a student in a French institution.
This credit is guaranteed by the State ; therefore, it is not necessary to have a guarantor or a ceiling of income.
The amount, the duration of the loan and the interest rates are determined by the lending bank. However, the amount of the credit is generally between 1000 and 15 000 $ with an interest rate around 3.5%. The duration of the loan can not be less than 2 years.
Lease with option to purchase (LOA) / Leasing / rental with promise of sale
This type of consumer credit concerns a good. Mostly it’s a car. It allows the person to rent this property for a specified period for a period ranging from 2 to 6 years. At the end of the term of this lease, the lessor can acquire the property if he wishes but it is not an obligation. Using this system, the person can then ride with a new vehicle even if he does not buy the vehicle at the end of the lease.
With this contract, it is not asked to pay contribution but the following criteria are taken into account:
- Price of the property;
- Price once the rental is completed;
- Duration of the lease;
- Services included.
The personal micro-credit accompanied
This type of credit is particularly aimed at economically fragile people, who can not be part of a classic bank loan. This is why this contract does not require a minimum income. However, it is necessary to have a defined project in order to be rehabilitated in society (training, health, housing, vehicle to find a job, etc.).
Unlike other loans, people registered at the Francia bank can also benefit from this credit.
The loan can be between 300 to 5000 $, for a period ranging from 6 months to 4 years maximum.
Its rate usually varies from 1.5 to 4%, and the fees are still borne by the lending bank.
Thus, there are many types of consumer credit, depending on the reasons for borrowing, projects, and income. Whether it is the acquisition of a vehicle, a movable property or funding for studies, many credits are offered, with different conditions. Do not hesitate to consult several banks in order to play on the repayment rates and thus benefit from the best possible credit.