What is consumer credit?

Posted on August 2, 2016 by Marion

What is consumer credit?

Consumer credit is a loan granted to individuals to help them finance the goods and services necessary to meet the expenses of daily life. It can help the borrower to buy a vehicle as well as finance their driver's license.

There are 3 types of consumer loans:

  • the affected loan is linked to a specific expense and can only be used for that expense
  • the revolving loan is usually tied to the use of a credit card. This credit is made available to the borrower who can use it according to his desires and needs. It is the easiest credit to obtain. It requires good budget management.
  • the personal loan is a credit which allows the financing of several distinct projects. It is very flexible and therefore requires serious guarantees to be provided to the lending institution.

What are the terms of purchase of a consumer loan?

To subscribe to a consumer credit, you must contact a bank or a so-called specialized establishment. Generally, banks rather grant personal loans while specialized organizations - generally subsidiaries of banks - offer more restricted or revolving credits. Consider comparing the rate to find the best agency for your case.

Consumer credit adapts to your needs and sees its interest rate varied depending on the amount that will be loaned to you, the duration of the maturities, the application fees and any associated death and disability insurance.

Faced with the extent of consumer credit offers, the APR is an effective tool for comparing them, especially when they are of different duration. The Annual Global Effective Rate includes the cost of interest and all costs related to the subscription of this credit. It reflects the overall amount that you will have to pay in return for the money loaned. It incorporates both the expected interest, the administration fees, but also the amount of subscribed contributions if they are mandatory.

All consumer credit is governed by the Consumer Code which sets a number of rules to protect the consumer. Among them, the law provides for a period of 14 days following the loan offer where the borrower can withdraw. Only take out a consumer loan if you are sure you are able to repay it on time. If so, it can quickly become a money pit. For all your projects, do not hesitate to contact your advisor. He will be in the best position to refer you and assess your needs and abilities.

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A loan commits you and must be repaid. Check your repayment capacity before you commit