Need a sum of money of to finance all or part of your wedding project, work, or to renew your furniture? For this amount, a physical or online bank will only offer you one type of loan: consumer credit. In order to know what to expect from the credit offers that could be sent to you, focus on the characteristics of this loan!
What is a consumer credit?
Consumer credit is a loan that can be granted to an individual either directly by a bank or a credit institution, or through a store or an online sales site. As the name suggests, this loan is used to finance all types of consumer goods such as furniture or household appliances. But not only. The borrower can also use the loaned money to finance services (works, travel, etc.).
As with any loan, the bank and the borrower are bound by a contract. This contract can only be concluded when the bank has checked the creditworthiness of the borrower. This is to ensure that the latter will be able to reimburse their monthly payments. The bank’s response is generally quick, since a consumer credit file requires fewer investigations than a mortgage loan file.
Choose between different forms of consumer credit
Now that you know the exact definition of consumer credit, it is important to know that this type of credit can come in different forms. Thus, for a credit of , you may in particular be offered:
A revolving credit offer
Revolving credit is an unrestricted credit, like personal loan and loan between individuals. The borrower can therefore finance the project of his choice without having to justify himself. The bank places at its disposal a reserve of money which it can use in part or in whole. This reserve of money is gradually replenished with each reimbursement.
A personal loan offer
Unlike revolving credit, the sum of money is delivered here in one go to the borrower. The latter therefore knows the total amount of his credit, which is much more reassuring. Another major difference: the interest rates on a personal loan are much more affordable than those on revolving credit (20 times lower or even more for a loan of , depending on the repayment period!).
A loan offer between individuals
This form of credit is little known to the general public. However, it has the merit of going back to the origins of the traditional banking model. The loan between individuals works on the same principle as the personal loan, with the difference that the money comes from professional investors (individuals, pension funds, foundations, companies …). The borrower should therefore not apply to a bank, but to an organization specializing in lending among individuals.
Advantageous credit: good use of comparators and online simulation tools
Comparators and simulation tools, which are found on most banks and online credit organizations, are a great help for the borrower. On the condition of correctly interpreting the data!
When borrowing a simulator or using an online comparator for his loan, the borrower will have access to a wealth of information such as:
- the nominal interest rate (or debit rate);
- the APR (annual effective annual rate);
- the cost of insurance (if offered in the credit offer);
- the loan amount.
In fact, the borrower can compare the different offers at a glance. He only has to look at the APR appearing on each of them. This famous rate represents the total amount of the credit. It includes all costs such as the cost of insurance, the debit rate and the administration fees. It is therefore an essential element of comparison!