It can happen in life that one has to face expenses for which one does not have immediately the necessary money, for example the purchase of a car or the replacement of a boiler or a washing machine. defective linen.
Consumer credit can help
In this case, you can apply for a loan to banks and credit intermediaries. Lenders will eventually be ready to advance the money you are missing. That money, you pay it back in installments. But the transaction is not free: in exchange for this loan, you must pay interest and fees.
Do you really need a loan?
A consumer credit is usually not free: most of the time you have to not only repay the borrowed money, but also pay interest and fees. So think carefully before deciding to take out a loan. You know well in advance what are the big expenses you will face? In this case, see if it is not more interesting to save for this purpose. Thus, you will also have the necessary amount, without having to pay for a loan, and you receive the interest on the sum saved. See the section Pierre Bezukhov savings and placement how to proceed.
You can also prepare for unforeseen expenses, such as repairing a defective gas car or boiler, by building a reserve.
If you still need credit
Making a loan for smaller personal purchases is a decision that you must make with good thought. Choose a consumer credit that meets your needs and you are sure you can repay.
There are several types of consumer credit, but the two main ones are:
- a classic installment loan , where you receive a sum of money, which you repay on a fixed term, with interest and fees. The duration of the installment loan is limited by law. The maximum repayment period depends on the amount of the loan.
a flexible cash reserve (a “credit opening”), by means of a credit card or the possibility of “going below zero” (in negative) on the current account. This form of credit is suitable for smaller amounts and generally for unforeseen expenses, for which you lack money. Here too, you pay fees and / or interest on the amount borrowed.
When is mortgage credit interesting?
If you need more money, to finance transformations or to invest so that your home consumes less energy for example, you have to compare the advantages and disadvantages of a credit with the consumption compared to those of a mortgage loan.
A mortgage loan has the advantage:
- to offer you generally a lower interest rate than an installment loan;
- allow you to repay over a longer period and, therefore, pay a lower monthly fee;
- to give you the right to a tax reduction, subject to compliance with various legal conditions.
But do not forget the fees, which are higher, and the possible notary fees in case of mortgage for example.
The interest rate on an installment loan is generally higher, but:
- you can repay your loan in the shorter term;
- there are fewer specific guarantees required;
- the loan is in principle simpler and faster to subscribe to your lender;
- the administrative fees are generally lower.
- Before taking out a loan, check if you really need this loan, and if it is not better to save the necessary amount.
- Determine the type of loan that best suits your situation. Ask your lender for advice.
- Maximum deadlines are set by law for the repayment of consumer credit (installment loan, installment sale, leasing). They depend on the amount borrowed.
- For accounts and credit cards too, the contract can set the repayment term.