The personal loan is a type of credit that allows you to borrow money from a bank or other financial institution, in order to finance a personal project . It is a consumer credit , which can be used for all types of projects , such as the purchase of a car or a motorcycle, renovation works, holidays, etc.
You apply for a loan from the financial institution of your choice. You will need to provide certain information, such as your financial and professional situation , as well as the nature of your project.
The financial institution studies your request and offers you a loan offer . This offer specifies the amount you can borrow, the interest rate applied, the costs associated with the loan and the terms of repayment.
If you accept the offer, you sign a loan agreement and receive the borrowed money.
You begin to repay the loan according to the terms set out in the contract , by paying monthly installments which include the repayment of the capital borrowed and the payment of interest.
It is important to carefully compare the different loan offers and choose the one that best suits your needs and your budget. Do not hesitate to use an online personal loan simulator to get an idea of the different offers available on the market.
What are the terms of the personal loan?
The personal loan is a type of consumer credit that allows the borrower to receive a sum of money that he can use as he wishes, without having to justify the use of this sum to the bank. The personal loan is a depreciable credit , repayable in constant monthly installments , which include both the repayment of the capital borrowed and the payment of interest .
This type of personal loan is governed by the Consumer Code . This Code defines the maximum amounts and repayment terms for this credit. For the personal loan, it is possible to borrow sums of money ranging from 200 to 75,000 euros , amounts established by the Lagarde law in 2010. As regards the repayment period , this can range from 2 months at 7 years old .
The amount of the loan: it can range from a few hundred euros to several thousand euros, depending on the needs and possibilities of the borrower.
The duration of the loan: it can range from a few months to several years, and is determined according to the amount borrowed and the monthly payments that the borrower is able to repay.
The interest rate: it can be fixed or variable, and is expressed as a percentage of the amount borrowed. Application fees: they can be charged by the bank or the credit organization to cover the costs related to the study and the setting up of the loan.
It is important to carefully compare the different personal loan offers before subscribing, in order to find the one that best suits your needs and your repayment possibilities.
What are the differences between an assigned and unassigned personal loan?
The personal loan can be either assigned or unassigned . Here are the characteristics of these different loans:
The assigned personal loan: it allows you to carry out a well-defined project at the time of its subscription. It can be a car project, travel, wedding, works, etc. If you choose this type of personal loan then you will be obliged to use the funds for the realization of the said project.
The unallocated personal loan: here, you can use the funds as you wish to finance a consumer good or for any other personal project. You will not have to provide any proof to prove the use of the amount received. Note that revolving credit and other types of credit are found in this same category.
Thus, if you want to have more freedom in the use of the sum borrowed , it is preferable to take out an unaffected personal loan . In addition, the process will be simplified because you will not have to provide supporting documents concerning your project.
Many banks offer personal loan offers : Crédit Agricole, Boursorama, BNP, etc. However, determining which is the best bank for a personal loan is difficult because it depends on many factors such as your personal financial situation, credit history and financial goals.
It is important to research and compare offers from different banks before making a decision. It may be worth consulting a financial advisor or loan broker for advice and recommendations on which options are best for your situation.
What are the costs associated with the personal loan?
In order to assess the total cost of a personal loan, it is very effective to rely on the APR as we have seen previously. This figure is present and displayed on a mandatory basis by all credit institutions and includes the following data:
the overall effective annual rate applied over the entire duration of the loan,
any application fees,
insurance premiums (optional).
