Consumer credit, personal loan: how to borrow well?

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Consumer credit is booming. According to the French Association of Financial Companies (AFSF), the production of consumer credit is up sharply in the first quarter of 2022. According to statistics published on May 16, the market is up 7.7% compared to March 2021 and 17.2% compared to March 2019.

Like real estate rates, consumer credit rates have been increasing in establishments, mainly since the end of February/beginning of March. This is one of the effects of the war in Ukraine. However, usury rates have fallen slightly at the same time since April 1 on certain categories of loans. This is the case for those whose amount is less than or equal to €3,000, for example: the usury threshold has decreased from 21.17% to 21.11%.

“According to the French Banking Federation (FBF), 24.9% of households also hold at least one consumer credit in the process of being repaid,” says Monteiro, founder of CheckmonCredit.fr, a consumer credit comparator.

If the distribution between the French is fairly homogeneous, the share is however higher among people aged between 45 and 54: “29.7% of households in this age group have at least one consumer loan. They are a little overrepresented, because the needs are generally greater during these years: studies or housing for the children to pay for, work to be done in the main or secondary residence, change of vehicle… The projects tend to be heavier and thus last longer than for other households”, details the expert.

As for the needs, “at CheckmonCrédit, half (48% of the simulations) are related to the car (purchase or rental). 14% concern housing work and 38% more diffuse projects: wedding, travel, equipment of the house or even unforeseen (unanticipated invoice for example)”, he explains. The amounts borrowed amount to an average of €16,000 at CheckmonCrédit (because they are linked to fairly large projects) for an average duration of 56 months.

What are the main expectations of borrowers with regard to the personal loan and the pitfalls to avoid?

Borrowers mainly have 4 expectations, according to Sergio Monteiro.

“The one you think of first and of course the rate, because it is the cost of credit,” he explains.

“When simulating personal loans, the monthly payment is also important. You then have to ask yourself: ‘How much am I going to pay? Am I comfortable with this sum?'”, he explains.

Then comes the response time: ‘When will I receive the funds?’ “In this case, it is important to make the distinction between the answer in principle and the study of the file, which depends on the congestion of the said service (2 to 3 days minimum). It is also necessary to take into account the legal period for withdrawal of 14 calendar days, which can be reduced to 8. You must therefore wait between 8 and 10 days minimum between the loan request and the receipt of the money in your bank account”, he warns.

“Finally, the 4th expectation of consumption is the simplicity of subscription: ‘Is it done entirely online (process, sending of supporting documents, signature)?’ The administrative task should not be heavy”, warns the founder of CheckmonCredit.fr.

Before committing to taking out a loan, however, various elements must be studied. Here are which ones.

Don’t be too ambitious. To borrow well and avoid repayment difficulties, you must first “know your monthly budget and prepare your project well.”

Also avoid excessive consumer credit terms (except for renovation work). “The duration of the reimbursement must be proportional to your project. Do a first simulation to see the resulting duration. Be careful, however, because if you are reimbursing a project that has been completed for a long time (purchase of a used car for example, whose lifespan is not eternal) is that there has been a malfunction in the evaluation of the latter”, he warns.

Once your project is well established, compare similar offers, because the cost of credit linked to the rate and the repayment period. “At Checkmoncredit.fr, we compare 30 banking establishments and credit organizations, taking into account the competitiveness of the rate, the simplicity of the credit application or the flexibility of the offers (prepayment, change in the amount of monthly repayments at the down or up, postponement of deadlines)”, details the expert. “We then calculate a score for each establishment we rate.”

Revolving credits, at higher rates, can be addictive. So be vigilant. Better to turn to personal loans that let you know when they start, how long they last and when they stop. “You have to make the effort to be disciplined and to control your budget well so as not to unbalance it. If you are in difficulty, talk to your banker to find temporary or more permanent solutions”, he advises. .

Finally, note that “consumers can at any time decide to repay their loan in advance, in full (total prepayment) or in part (partial prepayment). Banks cannot oppose this. In certain cases, they can nevertheless ask for indemnities intended to compensate for their loss of earnings (0.5 to 1% of the amount of the credit).Note that in all cases, the penalties cannot be greater than the amount of interest that one would have paid if the “We had not made this early repayment. Finally, for revolving loans, there are never any early repayment penalties”, assures Sergio Monteiro.