In financial difficulty, particularly for the purchase of certain goods, you are strongly hesitant to request a loan from your bank or an organization to obtain certain assistance. However, not everything is often clear from the customer’s point of view, which is why thanks to this article, find out how it works.
What is consumer credit?
Consumer credit is, as its name suggests, a means of being credited for carrying out transactions other than in the real estate field. The latter makes it possible to obtain the necessary funds, which can range from $ 200 to $ 75,000, for the purchase of consumer goods, such as furniture, household appliances or even a vehicle, or to have available cash.
What are the different types of credit possible?
In this regard, the types of credit are diverse and variable. However, it is obviously necessary to inquire beforehand to know if you have the possibility of taking advantage of such a type of credit. The road is far from obvious. Here are the types of credit for consumer credit:
- Credit affected;
- Personal loan;
- Revolving or revolving credit;
- Free credit;
- Private payment card;
- Mortgage life loan;
- Personal microcredit;
- State guaranteed student loan;
- Credit granted for a very specific use;
- Rental with option to purchase.
Who can benefit?
Consumer credit is only for individuals. For the rest, that is to say businesses and the liberal professions, they have the possibility of obtaining other forms of credit to finance their property.
Generally, the use of credit of this type occurs during major purchases that require an additional fund to contribute. It can be affected or not, which means that the credit can be allocated on a specific good, stipulated in the subscription of the contract.
What are the pros and cons?
For the borrower.
By obtaining a consumer credit, the latter will be able to buy so-called consumer goods that are difficult to buy at once. However, the risk of debt distress in the future is very high. Another thing to take into account in your approach, the cost. This credit is generally granted at very high interest rates compared to market rates.
For the lender.
By pushing a person to consume, it contributes to the growth of the country economy but also to employment. The lender also has various protective measures such as:
- The obligation for the lender to give a pre-contractual information sheet describing the characteristics of the contract to the future borrower. The latter can therefore make an informed decision;
- The obligation for the lender to maintain the offer of contract recalling the conditions of the credit for 15 clear days;
- The obligation for the lender to ensure the solvency of the borrower by consulting in particular the national file of credit repayment incidents to individuals (FICP);
- The possibility for the borrower to retract within fourteen calendar days from the acceptance of the offer of credit contract. A withdrawal form is provided in the annex to the credit agreement;
- The possibility for the borrower to repay in advance all or leave the outstanding credit.