Need to finance a vehicle? A one-off project? Why not turn to consumer credit, but be careful, it must be taken out with caution. Linternaute.com gives you 10 tips.
Subscribe only by necessity This is the main trap of consumer credit. Too many subscribers get started on a whim. It is a mistake. You do not take out a consumer credit to afford the latest plasma screen when your budget is tight. It is the opposite of what some would call good pater familias management. The interest rates of consumer loans often oscillate between 3 and 20%. This represents a heavy financial blow for the borrower. You must therefore think carefully about your project before taking out such a loan.
Use a credit comparator
There are credit comparators like Choose.com, Loans which can be of great help in evaluating the market. “All the establishments have different criteria. They rate the profile and the project differently so you can be refused in one establishment and be accepted in another”, explains Cécile Roquelaure, the director of studies at Empruntis on France 5. When you compare two credits, the indicator not to be overlooked is the APR: the annual percentage rate. This indicator makes it possible to know what is the total cost of credit. For this, it includes in particular bank interest, application fees, the cost of compulsory insurance, guarantee fees, etc. This figure is important in decision-making and must appear on the credit proposal of the company. ‘financial institution. The APR cannot exceed the usury rate registered in the law by category of credit.
Make an assigned loan for a one-time purchase
This time your old car is definitely out of order. Unfortunately, you don’t have the budget to buy another one without borrowing. One of the possibilities is to take out a so-called affected loan. This credit is backed by the financing of a particular property. CEO of Cetelem, Laurent David specifies to La Quotidienne on France 5: “You have to adapt the duration of the loan to the good that we are going to finance. If you know that you are replacing your washing machine every 3 years, you do not don’t go buy it with a 10-year loan. ” The repayment of the loan does not begin until the delivery of the good. If for some reason you give up on the purchase, don’t panic! The credit is canceled automatically. You therefore do not have to repay a loan for an item that you have not purchased.
Beware of revolving credit
Below 1,000 euros of loan, the most common consumer credit is the revolving credit also called revolving credit in English. Banks, commercial brands offer it. Revolving credit is a special credit. The latter works like an envelope of money which is replenished when the borrower draws it. The advantage of this credit is that the borrower only pays interest on the amount actually borrowed. The other side of the coin is that this type of credit, by its ease of access, gives a feeling of “omnipotence” to the borrower which prompts him to make it a sort of permanent relief portfolio. “After a year, if you do not use your revolving credit, it is suspended,” said Laurent David, CEO of Cetelem at France 5.
Don’t neglect death insurance
Death insurance is often overlooked. Sometimes it’s the other way around, the credit institution pushes you to subscribe in spite of common sense. Four criteria should guide your thinking: your state of health, your marital status, the amount you borrow and the cost of insurance. In the event of death, if you have not taken out this insurance, the debt will be passed on to your heirs. Otherwise, the credit institution will be reimbursed via the insurer.
Do not finance a loan … with another loan
You have taken out a consumer loan and you are having difficulty meeting the monthly payments. The biggest mistake you could make is taking out another loan to pay off the first loan. This can lead you straight into a situation of over-indebtedness. “When you are in difficulties, you have to go very quickly to your creditor to find a solution”, advises Jean-Louis Kielh, president of the Crêque association, specialist in over-indebtedness at La Quotidienne sur France 5. Do not hesitate to call Croesus, the members of the association will help you and advise you in relation to your personal situation.
Use your right of withdrawal
You signed a loan and then … changed your mind. The project for which you wanted to borrow no longer seems to have priority. Do not panic ! From the moment you have signed the contract, you have a right of withdrawal of 14 days. To do this, all you need to do is use the withdrawal form which is included in your contract. Send the document to the financial institution by registered letter with acknowledgment of receipt.
In the consumer credit market, traditional banks are in competition with specialized establishments such as Sofinco, Cetelem, etc. Play the competition, do not hesitate to fill out files to obtain written offers. You will be able to choose the most competitive offer. Credit institutions also often make promotional offers. Cetelem, for example, offers loans with a rate (fixed APR) of 1% over 12 months for a borrowed amount of 4,000 euros. This can be advantageous with low rates but Cécile Roquelaure warns on France 5: “These call offers are linked to an amount and a duration. Her project must really correspond to the offer.”
The common practice of establishments is to spread out the monthly payments to make you pay as much as possible. For revolving credit, according to the Lagarde law of 2011, the duration of the monthly payments is limited: 36 months of monthly payments maximum if the amount borrowed is less than 3,000 euros and 60 months maximum if the total amount of the loan is greater than 3,000 euros. A law that reduced the excesses that the bankers and the system allowed to prosper, according to Laurent David, CEO of Cetelem. To lower the amount of interest, you have to negotiate the duration of the monthly payments and reduce them as much as possible.
Forget revolving credits with loyalty cards
Avoid taking out a renewable contract via the loyalty card of a brand (department stores, appliance brands, etc.) The interest rates are extremely high, often around 20% and above all, it is the best way to develop addictive behavior that can lead to over-indebtedness. Better to prefer an affected loan or a classic loan.