Consumer credit: everything you need to know

Consumer credit is a financial tool that allows individuals to finance purchases or projects without having to draw on their savings. There are different types of consumer credit, each with its own characteristics and conditions. In this article, we present to you the main information concerning these credits, their duration, the possible amounts, the resource conditions and other essential elements to make an informed choice.

The different types of consumer credit

The personal loan

The personal loan is an unallocated credit, which means that the borrower can use the funds as they wish, without having to justify the use to the bank. The amounts borrowed generally vary between €200 and €75,000, with repayment periods of up to 84 months (7 years).

The allocated credit

Affected credit is a loan linked to a specific purchase or project, such as buying a car or carrying out work. The borrower must justify the use of the funds, and credit will only be granted if the project is completed. The amounts and repayment periods are similar to those of the personal loan.

Revolving credit

Revolving credit, also called revolving credit, allows the borrower toobtain consumer credit which is a sort of reserve of money that he can use at his convenience. The amount of this reserve varies depending on the offers, generally between €500 and €6,000. The repayment duration depends on the amounts used and reimbursements made.

Rental with purchase option (LOA)

LOA, also called leasing, is a rental contract for an asset, generally a car, with the possibility of purchasing the asset at the end of the contract. The monthly payments are generally lower than those of a traditional loan, but the borrower only becomes the owner at the end of the contract if he decides to buy the property.

Conditions for accessing consumer credit

Resource conditions

To obtain consumer credit, the borrower must have sufficient income to repay the loan. Banks generally look at the debt ratio, i.e. the ratio between monthly expenses and income. A debt ratio below 33% is generally required.

Professional situation

Banks also take into account the professional situation of the borrower, preferring people on permanent contracts or civil servants. Self-employed people and people on fixed-term contracts can also obtain credit, but the conditions may be stricter.

Banking history

A good banking history, without payment incidents or significant overdrafts

, is an asset for obtaining consumer credit. Banks check the borrower’s banking behavior and can refuse credit in the event of recurring problems or registrations in the personal loan repayment incident file (FICP).

The characteristics of consumer credit

· Minimum amount: €200

· Maximum amount: €75,000

· Maximum duration: 84 months (7 years)

· Required debt ratio: generally less than 33%

· Professional situation: preference for permanent contracts and civil servants

To conclude

Consumer credit is a flexible and accessible financial solution that allows individuals to finance projects or purchases without jeopardizing their savings. Several types of consumer credit are available, with specific conditions and characteristics. It is essential to fully understand the different options and choose the credit best suited to your needs and financial situation. The conditions of access to consumer credit depend on the resources, professional situation and banking history of the borrower. Therefore, before taking out a loan, it is important to carefully assess your repayment capacity and compare offers to find the one that best suits your situation.