What is consumer credit?
A consumer loan is a loan granted to a borrower to finance his projects, whether it is a car loan, a work loan, a motorcycle loan, a wedding loan, travel loan, etc. The consumer credit rate varies from one bank to another, depending on the amount borrowed and the duration desired. It is therefore essential to compare offers to obtain the best financing solution for the realization of your project.
The stages of consumer credit
To finance your projects, here are some steps to follow in your search for a consumer loan.
- Choose the type of loan most suited to your project,
- Evaluate your borrowing capacity with a simulation of consumer credit,
- Compare consumer loan rates,
- Find out about the regulations in force.
With Lite Lender, discover each detailed step to complete your financing and finalize your project.
1) Choose the type of consumer credit most suited to your projects
1st key step before getting started, know the different credits. There is not one, but several types of consumer loans. If the forms of financing vary, the amount granted is nevertheless limited from 200 to 75,000 euros over a minimum duration of 3 months. We can distinguish “classic” credits such as personal loan, revolving credit and assigned credit from rental with option to buy (automobile). Depending on your project, some credits may be more advantageous than others.
The personal loan is a credit distributed by the banks in order to finance the borrower’s projects. It is a sum of available money which he can freely dispose of at a consumer credit rate. The borrower is therefore required to repay the capital borrowed according to the chosen term, interest and bank charges if applicable.
With a personal loan, you have the freedom to spend the amount as you see fit. You can thus carry out several projects depending on the amount borrowed. For example, buying a new car, doing work, going on weekends.
Restricted credit works differently from personal loan. Its amount and its grant are determined by the use made of the borrower. In other words, it makes it possible to finance a very specific object, mainly a vehicle. If the sale is canceled, the claim is also canceled. This type of credit is subject to the same rules as personal loans.
With this type of consumer credit, the property that you finance must be justified with the lender. It is a financing solution mainly used in auto credit.
Revolving credit is often linked to a payment card, this “replenishable” credit is a reserve of money made available by a lending institution. Its amount is defined beforehand.
The borrower can use part or all of it, but he only repays the amount borrowed. Which restores the reserve. Interest is paid only on the amount used. Also known as revolving credit, is subject to strict regulations, particularly on its advertising to protect consumers.
Rental with option to purchase or LOA is also a consumer loan. This is ” leasing “, a loan which opens the right to a promise to sell. In this case, a security deposit may be required by the lender. This will be refunded or deducted from the sale price at the end of the contract. The LOA is a contract assigned to a vehicle, often new, that you rent for a predetermined period via a monthly payment.
Please note, unlike the long-term rental (LLD), the borrower can decide to buy the vehicle on which he has an option to purchase on payment of its residual value.
With Lite Lender, you can benefit from this type of credit thanks to our partner dedicated to LOA.