Consumer credit remains the preferred credit of the French, but what is the consumer credit? – read more about consumer credit here
In this period of low rates, favorable to borrowing, consumer credit remains the second type of loan to which the French resort most after the mortgage. This credit and the expenditure it favors represent more than 7% of GDP in France. The consumer credit is adapted for the consumption of individuals.
What is consumer loan?
Consumer loans are granted for private purposes for consumption . The consumer credit is intended for all those who want to buy a piece of equipment (furniture, car …), a service (holidays, a wedding …) or a special need as a tax.
A credit that is used for private as professional activities of a natural person can be qualified as a consumer credit if only the part of professional use is incidental.
Loans provided to companies, corporations and legal entities can not qualify as consumer loans. The same is true of credit granted to natural persons in the course of their professional activities. The class of the loan should be clearly distinguished in order to benefit from the statutory protection for each category.
What are the types of consumer credit?
There are several credit options:
- the classic loan assigned to a clear need
It is characterized by a known duration, fixed monthly installments (monthly payments). The rates are known in advance, the maturities determined by the capital with interest and borrowing costs. Its object can be the financing of studies, the electrical household equipment, a real estate purchase, etc.
- unallocated credit to unspecified purpose
- permanently open credit, often linked to a credit card
- the overdraft, which is a special form of credit that allows the consumer to spend more than he has on his account
- the advance on operation (loan relay) granted to the borrower pending a substantial return of funds. This loan is repayable in one go when money is available.
We can add:
- leasing which is a lease of a good or service accompanied by an option to purchase. We rent a vehicle and at the end of the rental, we buy at a price fixed in advance.
Who are the lenders?
In the first quarter of 2016, outstanding consumer credit was up 5% year-on-year. Lenders are essentially specialized financial institutions . Among them are banks, credit companies, credit intermediaries who issue credit cards and so on. the social service of a company can also be considered as a lender since it lends to employees.
The activities of consumer loan operators must be approved by the prudential and regulatory supervisory authority (ACPR).
What information must I provide to have a consumer loan?
You have to provide the lender with the statement of your financial capabilities as well as the project that requires the credit .
The loan operator must ask you about the data he has to assess your financial capacity, allowing you to repay the credit that can be granted. He can also advise you on the formula and the choice of credit that suits you. You must answer these questions correctly, sincerely and clearly.
What should the lender ask me before any commitment?
The loan operator must provide you with a document called European Standard Consumer Credit Information (SECCI ). This document is prepared with the information you give to the lender. With this document, you can compete by comparing multiple offers to make an informed decision.
You may ask the lender for a copy of the Draft Consumer Credit Agreement at no additional charge.