Consumer credit is one of the most popular banking products. Which is normal because it is for individuals. This credit is granted, as its name suggests, to help finance the consumption needs of households. In France, this type of loan is subject to strict regulations, in particular to avoid over-indebtedness. The following will guide you on the exact operation of this loan.
Different categories of consumer credit
In general, consumer credit is intended to cover current expenses of the average citizen. Unallocated credits, earmarked credits, personal standing credits and online credits are distinguished.
The biggest difference is between the credit allocated and his colleague, the unallocated credit. As the name suggests, the first is especially indicated for targeted expenses. In other words, the bank granting the credit requires a justification of the usefulness of the money borrowed. If it is for the purchase of a new car for example, some credit organizations call it “car credit”. On the other hand, the unallocated personal credit is a sum of money available for all kinds of expenses. There is no need for the bank to know the destination of the money.
The interest rate and the small monthly payments
Most banks and credit institutions apply a fairly high interest rate for consumer credit, given the popularity of customers for this banking product. Before subscribing, it is important to make comparisons and use online simulators. These solutions are very useful for knowing the total cost of credit depending on the repayment capacity of the person concerned.
Banks sometimes offer customers small monthly payments that seem very attractive. Attention, often, these are combined with a revolving credit, a sum of money made available to the customer and which has a variable interest rate. Customers do not always know, but these interest rates are at the limit of the maximum allowed by the Francia bank.
Other modalities to know
In addition, it is brought to your attention that for consumer credit, borrower insurance is not always mandatory. But for some banks, it is a guarantee in addition. In the event of death, disability or loss of employment, the insurance covers the expenses related to the loan. In many cases, it accompanies the interest rate and is billed to the customer with monthly payments. As for early repayments, it is still possible to use them. At that time, failing not to earn interest, the bank may charge additional fees to the customer. Check all this with your banker.