What is a personal loan?
The personal loan or personal credit is a consumer credit that does not correspond to a given expense. The borrower benefits from a defined amount of money that he spends freely. The loan can make it possible to face a hard blow or to finance a personal project such as for example a family event or a trip .
A personal loan can be allocated or not and is repaid over a period of between 3 months and 5 years (or even 7 years depending on the institution). Its maximum amount is € 75,000. Like any credit, the borrower repays his loan through monthly payments calculated according to the amount borrowed, the duration of the credit, the price of insurance and the rate obtained.
The difference between an affected loan (car loan, motorcycle loan, work loan, etc.) and a personal loan is that you do not have to justify the amount of the purchase of the good or service from the lending financial institution!
The advantages of personal credit
The main advantage of a personal loan is the fact that you can take advantage of the amount borrowed as part of a cash flow requirement as you wish. You have no justification to give on the use of funds, usable in one or more times, on one or more goods and services. This is commonly called a credit without proof .
On the other hand, the personal loan has a fixed rate for the duration of the loan. As a result, you know in advance how much you have to pay in total but also every month in order to prepare for it. However, this interest rate is often higher than for credit assigned to the image of a revolving credit .
How to get a personal loan?
To obtain a personal loan, the borrower can contact a bank, a credit organization or any other financial institution authorized to offer consumer loans by the Banque de France. It should be noted that each structure offers its prices and conditions. It is therefore imperative to compare the offers before committing.
The personal loan will only be granted if the borrower has a real repayment capacity (or borrowing capacity). Indeed, the debt ratio of the person or the household must in no case exceed 33% of total income to avoid a complicated financial situation. This is the reason why the lending institution asks you for a whole series of documents relating to your financial situation when you apply for a loan.
The personal loan amount therefore takes into account:
Like any credit, a personal loan must be repaid by the borrower. Although financial institutions check the repayment capacity of each consumer, the latter must himself ensure that he is able to repay the loan before committing.
A personal loan is considered valid at the end of the withdrawal period. This legal period is 14 days from the date of signature of the contract. The validation of the personal loan is signified by the payment of the borrowed sum into the borrower’s account.