How to buy on credit without breaking the bank? Consumer credit has undergone various reforms aimed at protecting consumers from abuses in the distribution to individuals.
However, we must never forget that comparing and negotiating remain the fundamental rule to respect to make the best choices and to borrow smart!
Focus on consumer credit!
First of all, let’s recall some of the main rules that banks and financial institutions must apply for the sale of consumer credit:
- The revolving credit should not be called by any other title than revolving credit. Trade names are banned: cash credit and account available, or reserve money …
- Because the revolving credit is a danger for the good management of the budget, beyond € 1000 borrowed, the lender must offer another type of credit more secure: personal loan for example.
- An in-depth study of the borrowers’ financial situation is mandatory from a loan sum of over € 1000. This is to check the creditworthiness of the subscriber (s).
- This is not an obligation, but it is recommended to refuse a consumer credit as long as the subscriber/borrower’s debt ratio is higher than 33%.
Determine the credit you need!
Compare and negotiate consumer credit proposals issued by banks is essential to get the best offer at the best rate. However, there is no point in comparing and negotiating offers if they are not suitable for your project (s).
To avoid buying a consumer credit that does not match your situation, upstream determine the credit you need!
Reminder stitch of different types of credit :
- The personal loan : This is a depreciable credit generally at a fixed rate. The amount borrowed can be freely used by the subscriber (s).
- The appropriated credit : This is a depreciable loan generally at a fixed rate. Its difference is that the borrowed funds are intended for the specific expense. If the intended purchase does not occur, then the assigned credit is terminated automatically.
- Revolving credit : This is a capped money reserve and whose capital is available for permanent use. Indeed, the capital is reconstituted as and when monthly repayments. The debtor interest rate is not fixed, it is a variable rate that increases with the use of funds. On the monthly statements of revolving loans the number of monthly payments remaining is indicated. The reality is that it is impossible to know the remaining credit duration!
- The ease of payment : It is simply a facility given by a merchant to his customers to be able to pay for their purchase in several installments.
- Free Credit : This is a phased over several months, the amount of the purchase without any fees. With sometimes a deferred payment for the first monthly payment.
For more information on different types of credit , visit the Public Services link.